Rural banking in India plays a vital role in the growth of rural economy. The banks in rural areas are found to help the rural people in their all-round progress. Rural banking is rightly called an engine of rural development. The overall position of rural banking in India is not quite encouraging. The banker offers almost the whole thing—from a plain savings product, to loans for businesses and wealth management guidance—to the rural population and creates new strategies to support rural customers. Though the Indian banks are penetrating the rural areas to meet the rural customers’ needs, still they have not achieved the set goal. Penetration indicates how many users are there for products/services. Getting consumers to use its products/services is one of the measures of success of a company. The government also seems to be instrumental in the dispersal of branches of regional and rural banks at the grassroots level to provide banking service to the needy people. Therefore, the present study aims to analyze the penetration of the banking products and services in the rural areas of Sivakasi.

Banks play a dynamic role in the economic development of a nation. It may not be an exaggeration to assert that without the evolution of commercial banks in the 18th and the 19th centuries, industrial revolution would not have occurred in Europe. It is equally true that without the development of sound commercial banking, underdeveloped countries cannot hope to join the group of advanced countries. The banking development for economic growth is marked by a comprehensive program of branch expansion, mobilization of savings, lending to priority sector and weaker sections of the society, assistance to agricultural sector and regulating flow of credit to industries and improvement in export sector (Gorden and Natarajan, 2015).

Banking has become a highly competitive sector in India. The banking organizations, since the beginning of this decade, have been facing challenges in terms of technological revolution, service diversification and global banking. The banking sector in India is growing vastly. Favorable response of the commercial banks to the implementation of policies and programs related to rural development yielded positive results; however, there are a few areas which need the attention of banks and governments. Commercial banks face high transaction costs in their rural branches. The problematic issues in rural banking of commercial banks are lack of infrastructure, reluctance of staff to serve in remote rural areas, a large number of accounts dealing in small amounts, difficulty in getting financial information from rural borrowers thus leading to some amount of uncertainty in the minds of the bankers and lack of security in carrying cash to the remote areas for mobile banking.