Page 31 - Banking Finance March 2022

ARTICLE

Y Cross Selling of Retail Lending Products through the Jan Affordable Retail loan products in Rural Area are basic
Dhan Accounts. demands similar to the urban area. Housing Loan, Vehicle
Loan, Education Loan and Personal Loans are the main
Y Improved process and bundled product offerings.
penetrating products of Retail Lending in Rural Area. Apart
Y Customer specific product or offering on regular basis. from these products the penetration of Credit Card will also
be the beneficial product. There is huge demand of housing
Y Focus on understanding customer needs or preferences. in rural area and the majority of the housing is self- financed;
Y Moving from class retail lending to mass retail lending. except some of the weaker section housing through the
Govt. Schemes. There is a need of financial innovation in
Drivers for Retail Growth in Rural Areas: housing sector in rural area.
There are a lot of improvements witnessed in the rural area There is sharp increase in the literacy level in the rural area
like communication, connectivity, literacy etc. The following and the parents are willing for professional and higher
points which is indicating the scope of retail lending education for their wards. There is need of education loan
opportunities in the rural area: for such parents and students for pursuing the higher/
Y Increase in business and economic activities professional education. Government has already announced
Y Change in demographics the interest subsidy scheme under education loan for lower
income group. Banks have to design and develop the special
Y Increase in disposable income and purchasing power
educational loan scheme for such parents/ students where
Y Increase in literacy level there is lack of security/collaterals and they need higher
Y Technological enrichment quantum of loan.
Y Increase in financial literacy
Several efforts made by RBI as well as Central Government
Y Improved lifestyles at par with urban people to boost agriculture credit by establishing Regional Rural
Y Nuclear family concept started in rural area Banks and National Bank for Agriculture & Rural
Development (NABARD) and scheme like Mudra Loans,
Y Need of higher/ professional education
PMEGP etc. for small business. Several Government Subsidy
Schemes are implemented by State and Central Govt. to
Future Strategies……………….. boost the agriculture and business loans. There is a need of

There is a tremendous scope for increasing credit to retail many such efforts to boost the Retail Credit in Rural area
segment in rural area. Rural Retail Consumer who by establishing Small Retail Loan Banks/ Retail Loan Subsidy
represents a huge untapped market for consumer credit will Scheme/ Prime Minister Scheme for Retail Loans etc.
be the more profitable sector for banks. The data base
available with the banks will be the main source of their RBI has imposed regulatory ceiling/target for agriculture
demographic and information that can be used by the banks and small business loans under priority sector but there is
to targeting those customer segments. The detailed no such ceiling/ target imposed for Retail Loans under
consumer databases are available for data mining to design priority sector classification. So there is a need of such
customized financial services/products. ceiling/target to be imposed by RBI for retail loans for rural
area as a part of priority sector lending. RBI may impose
The banks have to update the database of consumer as ceiling on interest rate for Retail Loans for these sectors.
credit information. Customer in Rural Area demands highly
personalized banking products and services. Understanding We hope Indian Banks are expected to see strong growth
the rural customer behaviour, offering customized products, in Retail Lending in Rural area over the years. In near future,
doing the right partnership/ collaborations and developing banks with vision and mission will try to capture this Retail
the appropriate business models and organization structure lending opportunities through a series of innovative
is the pre-requisite for the banks to tap the vast potential additions to their products, services & technology and
of rural area. marketing methods. T

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