Page 29 - Banking Finance March 2022

ARTICLE

RETAIL LENDING

IN RURAL AREA:

NEED A HOLISTIC

INNOVATIVE

APPROACH

M Most of the Indian population is living in the to increase in literacy rate and unemployment in the

agriculture sector, rural people are forced to go for non-
villages and the agriculturists are playing a
vital role in the economic development.
agriculture activities to get the other income. The presence
Agriculture credit is helping them and it
credit facilities at par with the urban people and providing
provides livelihood to the country's population. But only of increased middle income group in Rural Area demands
agriculture credit is not sufficient for them. Other credit ample opportunities to the banks to extend credit to non-
requirements are also there for them. One of the most farm sector. Retail Credit is also an important instrument
important is the retail credit because they also require for rural development. Retail lending in India is not new for
house, vehicle and other essentials to change their life style. banking but it needs a reform, considering the difference in
livelihoods of Urban and Rural People.
So far we are thinking about economic development in the
Urban/ Metro areas and this rural segment is left behind, There are several efforts witnessed from banks to catch the
even though the income level has increased substantially; agriculture loans in rural areas but there is no evidence for
because the lower income groups are moved to middle tapping retail loans in rural area. Banks are seeing the
income group in rural areas. It has been observed that, due Retail Credit growth in Urban/Metro areas but they are not
putting required efforts for the growth in rural areas. In rural
lending the growth is found in agriculture and small business
About the author loans but still not finding growth in retail lending.

Sujit Kumar Suman There is a significant flow of bank credit to finance
Chief Manager (Faculty) agriculture and allied activities compared to retail credit in
Union Bank of India, rural areas. Over the past few years, there is a lot of retail
Staff Training College Bengaluru lending in Urban/Metro areas but rural areas are still

BANKING FINANCE | MARCH | 2022 | 29