Rural finance in India

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Rural finance has always attracted many national and private banks along with non-banking financial institutions since rural areas contribute a large part of our population. With microfinance institutions going to the grassroots, the competition has only intensified. Their strategy of giving rural people access to financial services has helped many farmers and small entrepreneurs to escape from the clutches of poverty and move towards economic independence.

Rural banks are striving to provide loans to customers who are presently at the bottom of the socio-economic class. This helps rural people to obtain credit even for amounts which are not usually offered by commercial banks. This feature of rural credit schemes helps the people to pursue dreams that are beyond their usual capacities and aim for better growth.

Rural banks and non-banking financial institutions are also encouraging the rural public to invest in fixed deposit schemes. This helps them to save a part of their incomes and earn regular interest on them. Technically, fixed deposits are a fixed amount of money deposited in a financial institution for a predetermined period at a fixed rate.

Fixed deposits are also better for rural investors than other investment instruments like equities and mutual funds. The risk involved in fixed deposits is much lower than in investment schemes. Fixed deposit schemes are also advantageous in a way that one can secure a loan against their fixed deposits.

There are several schemes for varying periods ranging from a few months to around 5 years. There is a high level of safety in fixed deposit schemes which makes it extremely popular among rural investors. Along with savings, it offers a robust interest as well.

Financial institutions including rural banks are now offering attractive loan schemes for the purchase of vehicles and farming equipment. There are also a few banks which offer home loans for people living in semi-urban and rural areas.

Rural finance helps the small time businesses to flourish under a secure environment and looks to further their growth by providing loans to service their needs. Commercial vehicles and construction equipment are available under these schemes too.

Rural finance is helping bridge the divide between the urban and the rural areas by providing them ample opportunities to grow in the form of easy finance. This in turn helps generate employment on a sustained basis in the rural areas. The country's rural population makes up for a sizeable amount. The progress of the rural population will affect the economy positively and contribute to the growth story that is called India.

Fixed Deposit | Rural Bank | Rural Finance

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