If companies like Unilever, Proc tor & Gamble, Mahindras, Haldiram, etc., can go to the rural India for exploiting the untapped market to expand and grow, why can't the banks also think on those lines and quench the thirst for credit of rural India and get themselves incentivised in the form of bigger customer base, higher margin, etc.
"IBN (private bank) has its eyes set on rural India to increase exposure considering the huge demand for banking Indian rural sector.""Credit demand in rural India is expected to be around Rs. 1, 330 bn, whereas its supply was just about Rs. 40 bn in 2005.""State Bank of India, the country's largest bank, announced that it would shift its focus to rural India to boost the retail portfolio."
These are a few of the news reports, which appear quite regularly in the national economic/ non-economic newspapers. Until now, banks and other financial institutions have not given sufficient attention to the demand of this market. Even those who are present there and taking care of the needs of rural population, are largely focused on farm credit and agri- finance (including loan requirement for allied agricultural activities). Hardly any bank is there which makes an effort to know the aspirations of these people, residing in villages.
Therefore, the banks have to go beyond agri-financing and also think about expanding in this part of the country through the non-agri-financing route. The banks lend money to their customers for the purchase of household goods, for the education of their children, for helping them to set up trade and industry, etc. (Refer Figure) As far as increasing the base is concerned, rural population should form the core of lending for all the banks, be it public sector, private or foreign. |
