Today, the rural development is an important issue. The banks are playing a key role in the same. This article emphasizes the concept of financial inclusion and some of the latest innovations in the rural banking. And it also throws light on globe-wide innovations and Self-Help Groups (SHGs) in India. It discusses the recommendations made by the C Rangarajan Committee on the financial inclusion and SHG-Bank Linkage Program.

Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low-income groups. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. As banking services are in the nature of public good, it is essential that availability of banking and payment services to the entire population without discrimination is the prime objective of the public policy. Over the last two decades banking sector has shown a remarkable growth. "The dependence on moneylenders has not decreased.

It has, on the other hand, increased in several rural regions", says the Reserve Bank of India (RBI) study. The banking facilities are out of reach for the rural masses. In India, the majority of the poor people are living in the rural areas. Now, banks are working with a motive to attract and make the rural folks aware of the banking facilities. The extension of the banking facilities to the rural areas is nothing but `rural banking'. In India, in the earlier days, rural people use to depend on moneylenders, according to an RBI study. The study also shows that there is a simultaneous increase in the number of registered and unregistered moneylenders. The main mantra behind the growing moneylenders is the relationships, which they maintain with the borrowers.

These informal lenders also provide credit against security of gold jewelry, land documents, cultivation rights, and promissory note depending on the convenience of the customers. In India, mass banking is encouraged with the motive to attract the rural villagers to make more accounts. In this regard, banks are advancing to branchless banking. The telecommunication tools play an important role in spreading banking activities to the non-banking rural areas. The grameen phone brings great changes in this regard. In rural areas, the credit needs are categorized in to three types - credit needs of poor and low-income people, general financial needs of the rural areas by people of all income levels and agriculture-based activities.

Professional Banker Magazine, Rural Banking, Self-Help Groups , SHGs, C Rangarajan Committee, Banking sector, State Bank of India, SBI, State Bank of Hyderabad, SBH, Union Bank of India, Andhra Bank, Axis Bank, Banking services, Punjab National Bank, Integra's Mobile Financial Applications Secure Terminal , IMFAST, Financial Information Network and Operations Ltd., FINO.