Rural Banking & Financial Institutions

1. Role of Rural Banking – Rural banks support agriculture and rural development. They provide credit and savings facilities.
2. Regional Rural Banks (RRBs) – Created to serve rural credit needs. They combine local focus with a commercial banking structure.
3. Cooperative Banks – Operate at village, district, and state levels. They promote community-based financial support.
4. NABARD – Apex institution for agricultural and rural development. It refinances RRBs and cooperatives.
5. Priority Sector Lending (PSL) – Banks must lend to agriculture and weaker sections. This ensures inclusive credit flow.
6. Agricultural Credit – Essential for seeds, fertilisers, and equipment. Short-term and long-term loans are provided.
7. Kisan Credit Card (KCC) – Simplifies credit for farmers. Promotes timely access to crop loans.
8. Microfinance Institutions (MFIs) – Provide small loans to low-income groups. They support self-employment.
9. Self-Help Groups (SHGs) – Encourage savings and microcredit among women. Help reduce poverty in rural areas.
10. Financial Inclusion – Ensures access to banking for all. PMJDY played a major role in expanding accounts.
11. BC Model (Business Correspondents) – Provides banking services in remote areas. Helps reach unbanked populations.
12. Digital Banking in Rural Areas – Mobile banking and UPI are expanding. They reduce transaction costs.
13. Agricultural Insurance – PMFBY protects farmers from crop loss. It stabilises rural income.
14. Rural Infrastructure Development Fund (RIDF) – Supports irrigation, roads, and storage projects. Managed by NABARD.
15. Rural Non-Farm Sector Credit – Supports rural industries and services. Reduces dependence on agriculture.
16. Grameen Model Banking – Inspired by Bangladesh’s microcredit system. Focuses on group lending.
17. Long-Term Rural Credit – Needed for tractors, machines, and land improvements. Cooperative banks play a major role.
18. Short-Term Rural Credit – Helps farmers meet seasonal needs. RRBs and cooperatives provide it.
19. Rural Savings Mobilisation – Encourages financial discipline. Supports local investment.
20. Credit Monitoring – Ensures loans are used properly. Reduces NPAs in rural banks.
21. NPAs in Rural Banking – Arise due to crop failure and price fluctuations. Effective monitoring is needed.
22. Role of PACS – Primary Agricultural Credit Societies operate at the village level. They provide grassroots financial services.
23. Warehouse Receipt Financing – Farmers can store produce and obtain loans. It prevents distress sales.
24. Rural Branch Expansion – Banks must open branches in underserved regions. Improves access to credit.
25. Financial Literacy Programmes – Teach rural citizens about banking. They improve credit discipline.