Rural Banks and Their Expansion in India

RURAL BANKING
INTRODUCTION

Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focused upon the agro sector. Today, commercial banks and Regional rural banks in India are penetrating every corner of the country are extending a helping hand in the growth process of the rural sector in the country

MODERN economy may he called "bank economy". The banking system spares the individuals and tile communities the trouble of stockpiling bulky chattels and enables them to attain domestic security and transact business by means of ever-negotiable bank accounts. 

The aim’s and objects of Rural Banks are as follows :

1. These banks will provide credits to rural population to make it more productive and raise the level of life.

2. They will identify the credit needs of each region to regulate produc­tivity and avoid wastefulness.

3. The banks will help eradication of poverty and eliminate the financial constraints that mar the progress of poor farmers and artisans.

4. These banks will combine the better features of both the systems of commercial banks and the co-operative societies avoiding inabilities that are present in them.

5. They will also enhance the membership of primary societies and expand it substantially.

6. They will develop the tendency to repay regularly the government loans. The proper climate for recovery of loans will be created and non­payments will be discouraged.

7. The rural banks will also help rural industries, animal husbandries, poultries and fishery.

These banks will evolve an economic structure of rural India to make the use of the fruits of science and technology as their motto is “Banks exist for the people and not people for the banks.”

The government has contributed 15% of the initial capital and 15% is proposed to be raised from the local people. But this idea was dropped. The transactions of these banks will be made in the regional languages so as to make them truly people’s banks.

Rural banks have been established to meet the needs of the weaker sections of society. It will eliminate rural indebtedness. It will save the rural population from the clutches of the clever moneylenders. It will also promote economic development by providing the much needed funds to marginal and poor farmers. The possibilities of lack of funds to start small-scale industries will be eliminated. Easy loans will be provided to them on low rates of interests without having substantial securities. The bank staff will specially be made rural minded so that the villagers may not feel reluctant to partonise these banks. The efforts will be made to form banking habits in villagers.