Page 30 - Banking Finance March 2022

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suffering from such financial services. This is mainly due to lending and their repayment behaviour is unknown
security, income proofs and other documents required by which may be the threat to the banks and chances of
banks which is not easily available with the rural people. rejection are more.
There is a limited access of Retail Lending Products in rural
population and still informal sources are very much effective Banks Approach needs an innovation:
in Rural Lending, Banks have still not reached to the Rural areas have special characteristics and their required
potential in the area although the rural economy constitutes
product should be as per the specific needs of the person.
of around 50% of GDP.
Reaching to the villages of eastern U.P. (Uttar Pradesh)
requires a different banking practices than the rich centres
If we talk about holding of credit cards by rural people, it
of Bengaluru and Mumbai. For growth in the Rural Areas
will be almost zero or only few people have availed this banks have to consider customer expectations, technological
facility, although in recent years retail banking has evolved capabilities, regulatory requirements, demographics and
as key area for growth in Indian Banking which is evident economics. Anytime, anywhere banking using differentiated
by rising trends in retail loans.
channels and technology will enable a multi fold increase of
reach in rural & remote area. Bank/ Branch has to develop
Major factors affecting Rural Retail the ability to view customers as a "segment of one"
Credit Growth: recognizing their uniqueness and tailoring their offerings so
that customers view banks as "meeting their needs" not
Y Lack of Marketing efforts: In Rural Area different
marketing approach is required to catch the business, pushing products.
as the nature and characteristics of the area is quite
A few numbers of simple products can be customized and
different than the urban area. There is lack of proper
marketing efforts to wards reaching the last mile. For the bank has to maintain long term relationship with this
marketing in rural area familiarity with the area, segment for doing the series of transactions in Retail Lending
proficiency in local language, acquaintance with Rural and Cross Selling. Banks are looking for an opportunity in
urban areas, due to urbanisation they require houses/
Folks, Public Relations, need based sponsorship is
vehicle for a better life style; if same concentration can be
required.
given in the rural area then people will not move to the
Y Small Loan Accounts: Unlike urban area the loan size urban areas. For capturing the needs of low income groups,
of the rural area is small. But banks are targeting for skilled employees are to be posted in Rural Branches. The
big ticket size advances so their retail business following innovative approach can be adopted:
concentration is low in this area. Y Product innovation - as per area specific scheme.
Y Lack of Security: In Rural area the land records was Y Tapping of potential rural customers.
not updated or the property ownership was not
transferred to the present owner in case of ancestral
properties. But at present people are also aware about
that and State Governments have also taken initiatives
to update the land records.
Y No specific product: No Specific Retail Lending
Products for rural areas are designed and developed by
financial institutions to tap the market. There is a need
of customer specific/ area specific product or offering
on regular basis.
Y Lack of Margin: In the past due to low income in this
area the required margin was not available with the
people, but their income level has increased and they
have also inculcated the savings habits.
Y Rejections of Loans: Rural people are new to the retail

30 | 2022 | MARCH | BANKING FINANCE