The basic reason for the financial assistance in rural areas. Indian agriculture is characterized by low productivity, which leads to low income. Due to low income and high level of consumption the investment made in agriculture is also low.

1. JESTIN
JITHIN
JOY
JOYAL
(AIMIT)

2. Introduction
 In India, over 65% of the population resides in villages.
And approx, 70% of the villagers do not have bank
accounts.
 But Finance is not completely absent. Just the sources
of supply are informal like moneylenders
 Moneylenders are said to control one third of all rural
loans

3. Agricultural productivity and need
for credit…..
 The basic reason for the financial assistance in rural
areas.
 Indian agriculture is characterized by low productivity,
which leads to low income.
 Due to low income and high level of consumption the
investment made in agriculture is also low.

5. Agricultural Credit situations..
 At present there are many financial institutions in
rural area like commercial banks, cooperatives and
regional rural banks.
 Traditionally, private money lenders, traders and
commission agents dominated the rural areas.
 But in the recent years a very significant efforts have
been made by central and state Govt to provide
institutional credit to rural areas to free them from the
clutches of traditional money lenders.

6.  Nearly 50 to 60% of the credit requirements of rural
areas are being fulfilled by the organized financial
institutions.
 The co-operatives were the only institutional agency
providing credit in rural areas prior to the
nationalisation of commercial banks in 1969.
 But for some extend the co-operatives failed to address
the financial problems in the rural area.
 Hence the commercial banks were brought into
picture.

7.  From then on the nationalised banks started to extend
their services to rural area.
 According all India Rural Credit Survey by Reserve
Bank of India today there are 28 nationalized banks
and they claim that about 50% of their branch work in
rural area.
 In addition, the commercial banks also sponsored
Regional Rural banks (RRB) which pays attention to
weaker section of the population. There are 196 such
RRBs operating in the country today.

8. Types of Credit
 Short- term Loan:-
Its also called as production loan or crop
loan. It is available for the duration of a crop harvest
and its sale. The loan is available for a maximum
period of 18 months and it has to be returned in one
lump sum after harvesting and marketing the crop.
 The amount is fixed for each crop for each district and
it covers the cost of seed, fertilizers, pesticides and
wages to be paid.

9.  Medium- Term Loan:-
He can avail this type of loan for investing on a
small scale. These include purchase and installation of
a pump set in existing well, purchasing a cow are
buffalo, purchasing of a pair of work bullocks and
other similar investments.
 These loans have to be repaid in installments spread
over a period of 5 to 8 years depending upon the status
of the farmer.

10.  Long-Term Loans:-
These kind of loans are provided for high
investment purposes like: purchase of Tractor and
implements, land improvements, digging a well and
installing a pump set for irrigation.
 The amount has to be paid back over a period of 20
years.

11. Budget highlights

13. Sources of finance to rural areas
 NABARD
 NABFINS
 COMMERCIAL BANKS (Nationalised & Private
Banks)
 National Cooperative Agriculture & Rural
Development Banks’ Federation Ltd
 State Cooperative Banks
 State Cooperative Agricultural And Rural
Development Banks(SCARDBS)
 RRBs
 Local Area Banks

14. NABARD (National Bank for
Agriculture and Rural Development
)
 NABARD was established on the recommendations of
B.Sivaraman Committee, (by Act 61, 1981 of
Parliament) on 12 July 1982 to implement the National
Bank for Agriculture and Rural Development Act 1981.
 It replaced the Agricultural Credit Department
(ACD) and Rural Planning and Credit Cell (RPCC)
of Reserve Bank of India, and Agricultural Refinance
and Development Corporation (ARDC).
 NABARD is India's specialised bank for Agriculture
and Rural Development in India

15. MISSION OF NABARD
 "Promote sustainable and equitable agriculture and rural
prosperity through effective credit support, related
services, institution development and other innovative
initiatives."
 initial capital Rs.100 crore in 1982
 paid up capital stood at Rs. 5,000 crore as on 31 March
2016.
 Government of India today holds Rs. 4,980 crore
(99.60%) while Reserve Bank of India holds Rs. 20.00
crore (0.40%).
 Reserve Bank of India (RBI) had relaxed rules on loans
to farmers, allowing NABARD to disburse up to Rs
23,000 crore to district cooperative banks for crop loans.

16. Functions of NABARD
 It acts as an apex body for meeting the credit needs of all types
of agricultural and rural development.
 It provides refinancing facilities to State Co-operative Banks
(SCBs), Land Development Bank (LDBs), Regional Rural Banks
(RRBs) and other approved financial institutions for financing rural
economic activities.
 It co-ordinates all agricultural and rural development
activities with the objective of tying them up with planned
development activities in the rural sector.
 It provides short-term, medium-term and long-term credit to SCBs,
LDBs, RRBs and approved financial institutions.
 It provides long-term assistance (not exceeding 20 years) to State
Governments.
 It has the responsibility of inspecting co-operative banks and
RRBs.
 It maintains a research and development fund to promote
research in agriculture and rural development.

17. NABFINS
 NABARD Financial Services Limited, [NABFINS] is a
subsidiary of National Bank for Agriculture and Rural
Development (NABARD) with equity participation from
NABARD, Government , Canara Bank, Union Bank of
India,Bank of Baroda, Dhanalakshmi Bank and Federal
Bank
 The main objectives of the Company are to provide
financial services in two broad areas of agriculture
and microfinance.
 NABFINS provides credit and other
facilities for promotion, expansion, commercialization
and modernization of agriculture and allied activities.

18. Commercial Banks
 Before nationalisation of top 14 commercial banks in
June 1969, they had an urban bias. They were mainly
accepting deposits from the urban people and making
loans to trade and industry. Agriculture and rural
industries were neglected by them. Since agriculture
by its very nature was a risky venture, private
commercial banks turned away from rural areas.
 Narasimham Committee on Banking Sector Reforms
(1991 & 1998)recommended to open branches in rural
areas and to give credit facilities to Farmers.

19. National Cooperative Agriculture
& Rural Development Banks’
Federation Ltd
 It is the apex level organization of Agriculture & Rural
Development Banks of the sector. The Federation was
set up in 1960 and is administered under the Multi-
State Cooperative Societies Act, 2002.
 The long term cooperative credit structure consists of
the State Cooperative Agriculture & Rural
Development Banks (SCARDBs) and Primary
Cooperative Agriculture & Rural Development Banks
(PCARDBs) which are affiliated to the SCARDBs.

20. Srno Particulars As on 31-March-2016
1 No. of SCARDBs
- Fully Functional 13
- Others 4
2 Network of outlets
- Branches of SCARDBs 596
- PCARDBs and its branches 1,038
3 Membership of individuals
- Borrowing Members 64,97,870
- Non-borrowing Members 44,45,346
4 Loans Outstanding Rs. 19,53,190.21 Lakh
5 Loans Disbursed Rs. 5,23,661.35 Lakh
6 Borrowings Outstanding Rs. 14,71,676.82 Lakh
7 Deposit Outstanding Rs. 2,18,260.88 Lakh

21. State cooperative banks
 State cooperative banks through their District Central
cooperative bans (DCCBs) and Primary Agricultural
Credit Cooperative Societies (PACS)

22. AGRICULTURAL AND RURAL
DEVELOPMENT BANKS(SCARDBs)
 State Cooperative Agricultural And Rural
Development Banks(SCARDBs) through their district
branches and Primary Cooperative Agricultural and
Rural Developmental Banks (PCARDBs)

23. Factors obstructing flow of bank
credit to agriculture
 Inability of farmers to provide security,
 Difficulties in recovering loans,
 Lack of clear-cut and up-to-date accounting of agricul-
tural transactions,
 The small amount of loan and high transaction cost.

40.  ROLE OF BANKING SECTOR IN RURAL INDIA:
 In this current scenario there are many rural areas where
the people does not know about the schemes launched by
the government of India. Banking sector is the best deliver
channel to make the awareness of schemes to the educated
and uneducated people in the rural area. In rural area 41%
of the people having the normal saving account, who does
not even know the technology developed in the banking
sector through mobile banking, ATM, credit card loan
facilities, net banking etc. Only 20% of the people in India
have the knowledge about the technology development in
banks.The greatest impact made by the banking sector in
rural India are as follows.
 Wealth to farmers.
 Wealth to education system.
 Wealth to business people.
 Retail banking.

41.  WEALTH TO FARMERS:
 Bank announces various schemes to farmers to develop
their financial status and economic growth of India in rural
area. Bank provides the loan amount with low interest to
develop the agriculture sector through farmers. In each and
every bank they have the agricultural officers to guide the
farmers regarding loan facilities and schemes provided by
the bank.
 WEALTH TO EDUCATION:
 Educational loan provided by the bank make the fantastic
impact on low level and middle level people’s children
education. By this loan rural area people can give the good
education level to their children. Education is one of the
main development of the rural area made by the banking
sector.

42.  WEALTH TO THE BUSINESS:
 Mundra Bank is one of the crucial steps taken towards the
development in the banking sector. Mundra bank
is specially devoted for the micro units/small level business
people. It gives loan to start and develop the business level for
low and medium level people. PRADHAN MATRI MUNDRA
YOJANA scheme is used to develop all micro units business
development.
 The schemes provided by Mundra Bank are
 Shishu covers loan amount upto 50000.
 Kishor covers loan amount upto 50000-5lakhs.
 Tarun covers loan amount upto 5lajh-10lakh.
 Mundra bank makes the milestone to the small level enterprises
to enlarge their business activities.
 RETAIL BANKING:
 Retail banking which is known as consumer banking provides
the services to individual consumers rather than companies.
Through retail banking ATM, Saving Account, Debit and Credit
card, Personal Loan, Home Loan etc are rural area people have
access to the banking sector.

44. Introduction
•Rural banking in India started since the establishment of
banking sector in India.
•As the name suggests, it includes banking organizations
operating in rural or sub-urban background.

45. Introduction
•The area of operation is limited to few districts or a region of a
state.
•Started with the main focus on Agricultural sector.
•Gradually raise its participation in trade, commerce, industry
and other productive activities in the rural areas.

46. Current Status
•Rural population of about 780 million with limited access to
financial services.
•A high proportion of rural lending is from informal sources.
•About 500-600 million people in India still do not have bank
accounts.
•Rural economy(Agriculture + on-agriculture) constitute about
50% of GDP.
•Current demand for credit in Rural India is around Rs.1,33,000
Crs.
•Commercial bank branches cover only 7% of rural sector and
large market is still untapped.

47. Rural
Banking
Regional Rural Banks
Cooperative Banks
National Bank For Agricultural
and Rural
Development(NABARD)

48. Regional Rural Banks(RRBs)
•Established under the provisions of an Ordinance passed on
26 September 1975 and the RRB Act. 1976 to provide sufficient
banking and credit facility for agriculture and other rural
sectors.
•These were set up on the recommendations of The
Narasimham Working Group during the tenure of Indira
Gandhi's government with a view to include rural areas into
economic mainstream.
•These are the Banks which mainly operate over a small region
sometimes limited to rural regions of few districts.

49. •RRBs are mainly owned by central government, state
governments and sponsor Banks.
Share of Various Organizations
Central Govenmetn State Government Sponser Banks

50. •Initially the upper ceiling over interest rate charged but from
august 1996 RRBs were given full freedom to their own rates of
interest.
•The interest rates mainly revolves around 14-18% for
advances.
•Due to their low their low capital to risk weighted Assets
Ratio(CRAR) They subsequently gets helps from Governments
and their sponsor banks to maintain a CRAR ratio of 7-9%.

51. Organizational Structure
•Board of Directors
•Chairman & Managing Director
•General Manager
•Chief Manager/Regional Managers
•Senior Manager
•Manager
•Officer / Assistant Manager
•Office Assistant (Multipurpose)

52. Current Scenario
•Mostly running into losses.
•Currently, RRB's are going through a process of amalgamation
and consolidation to prevent losses.
•At Present there are 56 RRBs in India.
•Some of the Most famous RRBs are:-
Allahabad UP Gramin Bank
Punjab Gramin Bank
Dena Gujarat Gramin Bank
Uttarakhand Gramin Bank
Prathama Bank
Etc.

54. Cooperative Banks
•Cooperative banking is retail and commercial banking
organized on a cooperative basis.
•Co-operative Banks in India are registered under the Co-
operative Societies Act.
•They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.
•In urban areas, they mainly serve small industry and self-
employed workers.
•“Anyonya sahkari mandali” established in 1889 in the province
of Baroda, is the earliest known cooperative credit union in
India.

55. •These Institutions mainly accepts Deposits and Lend Money to
the members only.
•Follows all Prudential Rules and Regulations.
•Provides Financial means to the People to prevent them from
debt trap of money lenders.

56. •Two of the major success of cooperatives are:-
Gujarat Dairy Cooperatives(Amul).
Maharashtra’s sugar co-operative.

57. Organizational Structure
•Urban Cooperative Bank : monitored by RBI
•Rural Cooperative Bank :
•Short Term Cooperatives:-
State Cooperative Banks
District Central Cooperative Banks
Primary Agricultural Credit Societies
Long Term Cooperatives:-
State Cooperative Agriculture and Rural
Development Banks (SCARDS).
Primary Cooperative Agriculture and Rural
Development Banks (PCARDBS).

58. Facilities
•They Mainly finance rural activities such as:-
 Farming
 Cattle
 Milk
 Hatchery
 Personal Loans

59. Self Help Groups(SHGs)
•Local cooperative village groups mainly for woman's intended
to provide economic
support and to promote savings
in rural areas.
• It can be registered or
•unregistered.
•Borrowings are made with or
without any collateral.

61. National Bank for Agriculture and Rural
Development
•NABARD is an apex development bank in India.
•A committee setup by RBI under the chairmanship of Shri
B.Sivaraman conceived and recommended the establishment
of NABARD.
•It was established on 12 July 1982 by a special act by the
parliament and its main focus was to uplift rural India by
increasing the credit flow for elevation of agriculture & rural non
farm sector.
•GOI holds 99% stake in this bank.
•Started with capital of 100 crs and on 31
st
march 2014,it stood
upto 4700 crs.

62. Roles
•Facilitates credit flow for promotion and development of
agriculture, cottage and village industries.
•It regulates the cooperative banks and the RRB’s.
•NABARD refinances the financial institutions which finances
the rural sector.
•Acts as Fatherly figure for other developmental activities going
over in region.
•SHG Bank Linkage
•Programme.

63. Lending Facilities
•Short Term Landings:- Refinance at concessional rate of
interest to State Cooperative Banks (SCBs) and Regional Rural
Banks (RRBs) by way of sanction of credit limits. Each
withdrawal against the sanctioned credit limit is repayable
within 12 months.
•Medium Term landings:- It provides medium-term loans to
SCBs for periods of 3 to 5 years. Mainly for agricultural
purposes.
•Long Term Agricultural Credits:- Long-term credit for agricul-
ture is provided mainly through investment in the debentures of
SLDBs.

64. Non-Agricultural Finance
•The NABARD provides short- term finance for:
The production and marketing activities of selected cottage and small-
scale industries (mostly handloom weavers’ co-operative societies)
The purchase and distribution of fertilizers.

65. Kisan credit card
•A Kisan Credit Card is a credit card facility to provide
affordable credit for farmers in India.
•It was started by the Government of India, Reserve Bank of
India (RBI), and National Bank for Agriculture and Rural
Development (NABARD) in 1998-99 to help farmers access
timely and adequate credit.
•Various private banks can also offer such cards to farmers.

66. Importance of Rural Banking
•Nearly about 70% Indians resides in Villages.
•Farmers are often need of banking facilities such as loans,
insurances etc., if banking facilities lacks in rural areas farmers
will have to suffer which makes economy to suffer.

67. •To widen the economic base the time has come to deepen its
root since no space is left over the surface to expand.
•In conditions of Droughts or some other calamities such
services are life saving.

68. •In Absence of such services Farming will be worse affected
which in turn will be affecting you as the prices of vegetables
and other agricultural products will rise.
•It also saves farmers from the hands of money lenders and
zamindars, and prevents them from falling into the cycle of
borrowing and repaying.