Role and challenge of rural banks in the financial inclusive growth of India

Abstract

Financial inclusion is delivery of banking services at a cheaper cost to the vast sections of under privileged and low income groups. An inclusive financial system can help in reducing the growth of informal sources of credit such as money lenders, which are often found to be exploitative. The performance of the Indian economy is one of the strongest drivers for the banking industry’s growth and vice versa. This represents a massive opening that financial institutions in the country can leverage upon for future growth. Keyword: Financial inclusion, Financial institution, Informal source of credit. Introduction Financial inclusion is the availability of banking services at an affordable cost to the disadvantaged and low income groups. In India, the basic concept of financial inclusion is having a saving or current account at any bank. In reality, it includes loans, insurance services and much more, for all members of an economy. An inclusive financial system has several merits. It facilitates efficient allocation of productive resources and thus can potentially reduce the cost of capital. In addition, access to appropriate financial services can significantly improve the day to day management of finance. Methods and Materials A systematic search was conducted to understand the broad issues on the role and challenges of Rural Banks in the financial inclusive growth of India. Important reports and articles were used for reference.