Page 1 of 6
Journal for Studies in Management and Planning
Available at https://journals.pen2print.org/index.php/jsmap
ISSN: 2395-0463
Volume 05 Issue 03
March 2019
Available online: https://journals.pen2print.org/index.php/jsmap P a g e | 1
Role of Rural Banks in the Rural Development in India
MR. RAJESH KUMAR
ASS PROF- Institute of Engineering &Technology Alwar (Raj.) And
RESEARCH SCHOLAR-Rajasthan Technical University-Kota (Rajasthan)
DR. O P PATHAK
HOD Department of Management studies- Institute of Engineering &Technology Alwar (Raj.)
Abstract:
“The Role of the rural banking in the economic development of a cannot be ignore. As Gandhiji
said “In India village economy is the backbone of Indian economy, the objectives of economic
planning cannot be achieved without the development of rural economy,”
This research paper is very indicative is an attempt to evaluate the trends in the rural banking. In
this, the concept and need for rural banking and rural development has been discussed. The role
of commercial banks, cooperatives, Regional Rural Banks and NABARD has been highlighted.
The presence of multi-agency approach to rural banking has also been discussed.
Key Words: Rural Banking, Economic Development, Rural Economy, Rural Banks, multi-agency
approach
1. Rural Development -Introduction
Rural development provides a large umbrella under which all the rural people can be brought
together for channeling their efforts for their betterment. It has to play a Important role in the
overall socio- economic development of India, where most of the population lives in rural areas.
Without the upliftment of the rural population, the objective of complete development of the
country cannot be obtained.
Page 2 of 6
Journal for Studies in Management and Planning
Available at https://journals.pen2print.org/index.php/jsmap
ISSN: 2395-0463
Volume 05 Issue 03
March 2019
Available online: https://journals.pen2print.org/index.php/jsmap P a g e | 2
The growth of Indian economy lies in the discharge of rural people from poverty, unemployment
and socio-economic backwardness. Keeping this in a view, the GOI implemented various
programme for rural development. An evaluation of the achievements of these programmes
clearly reveals the failureness to achieve desired objectiveness. Many factors can be held
responsible for not achieving the target, but non-availability of timely and adequate bank credit
can be stated as one of the important factors responsible for this situation. Rural development as
method is more an action oriented approach and its ultimate objective is socio-economic
transformation of the rural masses. It involves developing rural economy to increase the standard
of living of those rural people who are poor and require betterment.
2. Problem Identification
It embraces all those programmes that touch all levels of human living that is, agricultural and
allied activities, irrigation, health, communication, supplementary employment through village
and small-scale industries, housing and social welfare. So, rural development means complete
tranlation of rural society from traditional way of living to modern way of living..
3. Objectives of the Research
The objective of the study is to assess the role of various banking institutions in the rural
development of India. The following are the objectives of the Study: -
1. To study the problems of rural areas and the scope of banking institutions in solving these
problems.
2. To analyze the role of Commercial Banks in rural development.
3. To understand the role of Co-operative Banks in rural development.
4. To understand the role of Regional Rural Banks in the rural development.
5. To study the role of NABARD.
6. To make a comparative study of the institutions engaged in the rural development and to
assess the role of banking institutions in rural development.
7. To identify the gaps and to suggest improvements in the existing system of rural banking.
4. Story of Banking Institutions in Rural Development
The term rural banking refers to the functions of providing banking facilities and services to rural
economic activities and does not limit itself to any one institution like a commercial bank, or a
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Page 3 of 6
Journal for Studies in Management and Planning
Available at https://journals.pen2print.org/index.php/jsmap
ISSN: 2395-0463
Volume 05 Issue 03
March 2019
Available online: https://journals.pen2print.org/index.php/jsmap P a g e | 3
regional rural bank. The banks play the significant role in the Rural Development. Their roles
can be analyses under the following heads:
1) Financial Intermediation
2) Generation of Savings
3) Credit creation
4) Promotion of Liquidity
5) Inter-regional Mobilisation of Resources
6) Subsidiary Services
Commercial banking in India also developed originally in the cities and industrial centres in the
country. Commercial banking, therefore, had an urban base. The objective of profit maximisation
and the adherence to the real bills doctrine by the Indian commercial banks gave rise to certain
imbalances in the Indian commercial banking system with their adverse repercussions on the
balanced regional and sectoral development of Indian Rural economy.
These imbalances are;
i) Regional imbalances
ii) Local imbalances
iii) Sectoral imbalances
5. Need for Rural Banking
For a rapid expansion of banking in the rural area. It can be made out on the following grounds:
1. To correct imbalances
2. Provide Institutional Credit to Rural Areas
3. To mobilise rural savings
4. To integrate the money market
5. To induce Rapid Economic Development
6. The Promotional Role:
6. Review of Literature
Review of Literature done through following
