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Money & banking

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Money & banking

  2. 2. * Rural banking in India started since the establishment of banking sector in India. * Rural banks mainly focused upon the agro sector. * SBI- Largest bank catering to Rural banking. * Haryana State co-operative apex bank limited, NABARD, Sindhanur urban souharda co-operative bank, united bank of India are others banks operating in rural markets. INTRODUCTION
  3. 3. The two credit sources available to the farmers are institutional and private. Institutional sources consist of the co-operatives and commercial banks including Regional Rural Banks. Non- institutional or private sources include moneylenders, traders, commission agents and landlords. SOURCES OF RURAL FINANCE
  4. 4. Institutional Sources Of Finance At present three agencies supply institutional finance to farmers. They are co-operatives, commercial bank and the RRBs. Credit Delivery Mechanism In Rural Finance: Multi-agency Approach
  5. 5. The RBI has been taking keen interest in expanding rural credit. It has been taking a series of steps for providing timely and adequate credit through NABARD. The capital base of NABARD has been strengthened with both Government of India and RBI contributing to it. Scheduled commercial banks excluding foreign banks have been forced to supplement NABARD’s efforts- through the stipulation that 40% of the net bank credit should go to the priority sector, out of which at last 18% should flow to agriculture. Role Of RBI In Rural Credit
  6. 6. In recent years, a number of micro-finance initiatives have been introduction out of which Micro-finance is a novel approach to “banking with poor” as they attempt to combine lower transaction costs and high degree of repayments. KISAN CREDIT CARDS Another notable development in recent years is the introduction of Kisan Credit Cards (KCCs) in 1998-99. The purpose of the KCCs scheme is to facilitate short- term credit to farmers. Micro-finance
  7. 7. It is necessary to protect the farmers from natural calamities like drought, flood and pests, etc., as agriculture is highly susceptible to such risks and ensure their credit eligibility from the next season. Towards this purpose, the government of India introduction a comprehensive crops insurance scheme throughout the country in 1995 covering major cereal crops, oilseeds and pulses. Agricultural Insurance
  8. 8. Commercial bank first took interest in rural finance when the State Bank of India was created in 1995 to provide, among others, credit facilities for co- operative processing and marketing societies. An important argument in support of bank nationalization was that commercial bank had kept themselves aloof from the problems of agriculture and remained largely indifferent to the credit needs of farmers for agricultural operations and land improvement. COMMERCIAL BANK AND RURAL CREDIT
  9. 9. In the field of financing agriculture, the problems concern quantitative and coverage aspects. The RRBs have been under severe financial strain on account of higher transaction costs involved in handling of a large number of small-sized loan accounts; and somewhat lower interest income as a result of concessional rates of interest on small-sized loans. Problems Of Commercial Banks In Rural Credit
  10. 10. The main objective of RRBs is to provide credit and other facilities particularly to the small and marginal farmers. REGIONAL RURAL BANKS(RRBs)
  11. 11. Public Sector Banks adopted a new strategy for landing on the basis of a study on the impact of bank credit in the rural sector viz., “Service Area Approach” under which each semi-urban and rural branch of commercial banks was assigned a specific area comprising a cluster of villages within which it would operate, adopting a planned approach. SERVICE AREA APPROACH (SAA)
  12. 12. Agricultural credit to farmers and refinancing to cooperative agricultural Rural Development Banks is provided by National Bank for Agricultural and Rural Development which is apex institution for agricultural credit at the national level. NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)