Rural banking in India is important given that 69% of India's population lives in rural areas. State Bank of India has taken several initiatives to promote rural banking such as opening rural and semi-urban branches, partnering with regional rural banks, and developing programs like Kisan Credit Cards, self-help groups, and projects using smart cards and business correspondents. Overall, initiatives by the Reserve Bank of India and individual banks have helped increase access to banking in rural India, with the number of bank accounts, loans, and credit growing substantially in recent years. However, there is still progress needed to fully cover India's rural population with banking services.

1. RURAL BANKING IN INDIA
INITIATIVES TAKEN BY STATE BANK OF INDIA
Presented By:
Aman Garg
Mohd. Asif

2. A Glimpse of Rural India
69% of the total country’s population
69% literacy rate (it implies that this much can use the basic
banking services without much extra efforts)
More than 6.4 lacs villages
86% of the total rural population earns less than Rs.100 a
day
But still contributes 50% of the total GDP
There are 185 million “potentially bankable” people in rural
india who do not use formal banking due to poor access or
usage of services.

3. What’s making news????
Rural banking & microfinance need to be addressed
for sustainable growth : RBI Deputy Governer
(Ms.Shayamala Gopinath)
The biggest challenge for next decade or more to
banks in the country is to capture the banking
business of over 50% population of this country of
over 120 billion people.( Dr.Deepali Joshi, Executive
Director, RBI)

4. Rural Banking : Introduction
Rural banking in India started since the establishment of
banking sector in India.
Rural banks mainly focuses upon the agro sector and
priority sector lending.
In rural banking in India there are 14,475 rural banks in the
country of which 2126 are located in remote rural areas.
SBI- Largest bank catering to rural areas.
Other commercial banks, RRB’s, Co-operative Banks also
have their establishments in rural areas.
NABARD( a wing of RBI) provides credit and regulates
banking in Rural India.

5. Rural Banking: 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 do not have
bank accounts.
Current demand for credit in Rural India is about
Rs.1,33,000 crores.
Various policies and financial inclusion plans are being
administered by RBI to promote banking in rural
areas.

6. Structure of Rural Banking in India
Structure of Rural Banking
Commercial Banks
State Co-operative
Banks
Three tier Federal
co-operative Bank
Primary Co-operative
agriculture & rural
developement Banks
District Central Cooperative Banks
Primary
Agricultural credit
societies
Regional Rural
Banks

7. Banking services required by rural
sector
Loans
Savings accounts
Remittance
Financial counseling
Credit cards
Insurance
Risk mitigation products

8. Term of Rural Finance
 Short term loan - 12 to15 months
SHORT TERM LOAN are issued to the farmer for the purpose of
cultivation or domestics expenses such buying seeds, manure
and fodder for cattle, etc.
 Medium term loan -3 to 5 years
MEDIUM TERM LOAN are given to farmer to purchase
cattle, agriculture implement and to make improvement on land.
 Long term loan -15 to 20 years
LONG TERM LOAN are given to the farmer to purchase land, pay
of old debt and purchase useful machinery for long term usage.
These loans are for comparative long period since the farmers
can repay them gradually over a number of years

9. Initiatives taken by RBI
.
Priority sector lending scheme
Under this scheme banks must have to lend small
loans to small and marginal farmers for agriculture
and allied activities, loans to Micro and Small
Enterprises, loans for small housing projects,
education loans and other small loans to people with
low income levels. Presently, the target for aggregate
advances to the priority sector is 40 per cent of the
Adjusted Net Bank Credit.

10. Initiatives taken by RBI
Kisan Credit Card Scheme (KCC)
The major challenge is to bring all farmers into the
institutionalcredit framework. To boost the credit to
agriculture sector, apart from a host of initiatives, the
Kisan Credit Card (KCC) Scheme was introduced in the
year 1998-99 to enable farmers to purchase
agricultural inputs and draw cash for their production
needs.
Since the inception of the scheme public sector banks
have issued more than 5.48 crore KCCs till march 2012.

11. Initiatives taken by RBI
Regional Rural Banks (RRB’s)
Regional Rural Banks (RRBs) were established in the
year 1976 as a low cost financial intermediation
structure in the rural areas to ensure sufficient flow of
institutional credit for agriculture and other rural
sectors.
Currently there are 71 RRB’s in India with more than
16000 branches in rural areas.

12. Initiatives taken by RBI
Financial Inclusion Plan
Financial Inclusion (FI) is the process of ensuring
access to appropriate financial products and services
needed by all sections of the society in general and
vulnerable groups such as weaker sections and low
income groups in particular at an affordable cost in a
fair and transparent manner by mainstream
institutional players.
Banks were advised to extend banking services with
business correspondents models in the unbanked
remote villages.

13. Progress……..
The Financial Inclusion Plan (2010-13), introduced in
April 2010 has concluded in March 2013. The
penetration of baking services in the rural areas has
increased to a great extent.
Banking connectivity has been extended to 2,11,234/villages from 67,694 at the beginning of the plan
period. 5694 rural branches have been opened during
the period.

14. Progress……..
Numbers of Business Correspondents have increased
from 34,532 to 1,52,328.

15. Progress………
Total number of Basic Savings Bank Deposit Accounts
(BSBDAs) have gone up from 73.45 million in 2010 to
171.43 million upto December 31 2012, Number of
Kissan Credit Cards outstanding have gone up from
24.31 million in 2010 to 31.73 million upto December 31
2012 and Number of General Credit Cards outstanding
have gone up from 1.39 million in 2010 to 3.11 million
upto December 31 2012.

16. Case Study: State Bank of India

17. h
Largest commercial bank in India
Bank with largest branch network with more than
15000 branches.
Rural and semi urban branches -6473
SBI has 30 regional rural banks in India.
The rural banks is spread in 13 states extending from
Kashmir to Karnataka and Himachal to North east.
The total number of SBI’s RRB branches are
2349(16%).

18. h
The bank is actively involved since 1973 in non-profit
activity called community services banking.
Micro Finance deeply ingrained in SBI.
Social obligation services like E-ticketing, mobile
banking.
Comprehensive financial services viz.savings, credit,
remittances, insurance and financial products through
ICT.

19. Some projects of
SBI TINY ACCOUNT
Opening of simple savings account for the villagers
with zero balance.
One of the villagers as SBI mitra.
Drop box for depositing cash –at the SBI mitra’s
shop/house.
Small emergency loan.
SBI mitra assists in opening account.

20. Some projects of
SBI TINY SMART CARDS
A smart card with photo and fingerprint.
Card serves as the account
Can be used for govt. disbursals, insurance and loan
disbursals.
SBI KISAN CREDIT CARDS
This is medium limit card upto Rs.1,00,000.
Farmers can withdrew partial amount from card.
4% annual interest only on withdrew led amount.

21. Some projects of
SELF HELP GROUPS (SHG’s)
Credit linked 677 thousand SHG’s as on December
2006 with total disbursement of USD $660 million
benefiting 9.48 million families.
Market share of 43% of total SHF’s financed by
commercial banks in he country.
734 thousand SHG’s are having thrift account with
total thrift of USD$108 million in these accounts.
6400 thousand women beneficiaries.
Increase in income, expenditure on education,
clothes and health thus improving living standards.

22. Way forward…….
Expand reach
Kiosk banking
Educate customers
Be cost effective
Innovate and adopt technology
Focus on micro finance

23. This was just the beginning, the
best is yet to come.
Thank you