Financial exclusion of vast ruralities is a cause of concern. Recently, an RBI committee formed to look into the matter recommended microfinance route through self-help groups, with two models namely business facilitator model and business correspondent model.
Rural India remains still underserved with regard
to banking services, both on the deposit and
credit sides. 48% of the branches of commercial
banks and Regional Rural Banks (over 32,300 branches)
function in rural areas, with a per branch population of
23000. 31% of the deposit accounts (Rs.13.67 cr accounts)
and 43% of borrowal accounts (Rs. 2.55 cr accounts) are
in the rural areas. Still there is the critical issue of
financial exclusion of the rural poor in particular and
the ruralities in general. Farm credit flow is still
inadequate even though there is multi agency
involvement of cooperative societies, cooperative banks,
commercial and regional rural banks. Also, credit flow
to non-farm sectors in the rural areas is not up to the
needed levels. The savings potential of the ruralities
does not appear to have been efficiently channeled into
the banking sector. In fact, even now, only 18.4% of the
rural population are saving with the banks and only
17.2% of the ruralities are borrowing from the banks.
Another major issue of concern is the lackluster
performance of commercial banks and cooperative
societies in the rural sector. Many rural branches of
commercial banks are not really viable. The performance
of rural branches as a sector is declining. RRBs are in
no better shape either. There appears to be a tendency
on the part of the lending banks to avoid poor people
while lending: The number of loan accounts of small
borrowers with credit limit of less than Rs. 25,000 has
decreased from Rs. 5.8 cr in 1991 to Rs. 3.60 cr in 2003. |
