Why Banking in rural India is not taking-off?

[deepakraam]

Statistics says that only 34% of the population of India have access to banking services.More urban population will constitute ~50% of the above value.So, the % of rural ppl having bank accounts are very minimal.But 80% of India's population is living in villages.Why are ppl in rural not having bank accounts?Some of the points coming to my mind are

1.Rural ppl are illiterate.So they fear to go to the banks which looks odd to them.They are afraid that they can't understand the policies of the banks thereby they will end-up loosing the money.

2.Banks are not accessible to the ppl.No.of branches in villages are very minimal.So,ppl haven't seen banks in their villages.Banks are hesitant to open branches there which will eat their cost w/o any revenues.

3.Villagers don't have the concept of savings.They enjoy the moment of life they live and they don't care about tomorrow.So they don't care to save much.

Are all the above reasons valid?Besides,do you have any reason?
Pour your thoughts.

-Deepak.

[nimi_0188]

PLS HELP ME WITH RURAL BANKING PROJECT..................

[chandrapiyush]

Its a very interesting point that has been raised, I have worked in Banking for few years so from my prespective if you actually see there is a huge market in Rural India and is being realised by all the major bank.
The few Challanges that a MNC or Private Player face while trying to make a markin this market
a) The buiggest factor is the Profitablity, though all agree about the market that is available but no one is willing to wait for long
b) The time and resources required to be invested is huge
c) One of the biggest challenges that these banks are facing is to get the money out of homes and get in the account, it remains a biggest hinderence as still people feel its face to keep the money home.

But there are other means that these fiancial institutions are following to get their foot space in the market the flagship for this being SME & Microfinance.

These two have taken off very well and has been widely accepted. Though the potentail is huge with enormous apportunities but the problem remains what would be the next step after the inital one..

[randomvish]

the main reason of that is uneducation in rural areas.......in metros u have all the bankin facilities but thats not the case in rural areas.....in this generation also they r dependent on the moneylenders which suck their lives to the fullest.......also the government is not doin much on this issue.....

[kartik]

Its a very interesting point that has been raised, I have worked in Banking for few years so from my prespective if you actually see there is a huge market in Rural India and is being realised by all the major bank.
The few Challanges that a MNC or Private Player face while trying to make a markin this market
a) The buiggest factor is the Profitablity, though all agree about the market that is available but no one is willing to wait for long
b) The time and resources required to be invested is huge
c) One of the biggest challenges that these banks are facing is to get the money out of homes and get in the account, it remains a biggest hinderence as still people feel its face to keep the money home.

But there are other means that these fiancial institutions are following to get their foot space in the market the flagship for this being SME & Microfinance.

These two have taken off very well and has been widely accepted. Though the potentail is huge with enormous apportunities but the problem remains what would be the next step after the inital one..

I entered into a similar discussion with a senior HNI at ibm ( cant reveal names ) and he is very strong on mcommerce.

One thing to ponder upon is the penetration of cell phones visavis computers. The growth rate of cellphones is phenomenal and he gave some surprising stats to support it.

The point I am trying to make here is, use of high end cellphones to support micro finance activities can make inroads for banking and overcome most of the challenges you've pointed out :fear:

[nvignesh]

purely due to the pauper condition of the farmers which can be fuelled by the litigation of farmers and finally the indebtedness. Still promising returns thru agri loans are a far dream

[sonic]

Rural folk have limited earnings and savings. Hence they don't feel the need for bank deposits and bank accounts. The only time they use banking services is when they require a loan for setting up business or for agriculture.

[pahuja.chirag]

in India rural people think money is much more valuable than cheque or draft...

[ankush_garg2]

rural banking is main crunch that is taking up in India. its in incubation stage

[ankush_garg2]

SKS finances, idbi, sidbi are few who lead the way.

[ankush_garg2]

grameen bank setup a good example from bangladesh but proper steps needed to taken before proceeding.