Minor Project Report

On

“A STUDY OF MARKETING CONDITION REGIONAL

RURAL BANK”

Submitted Towards the Partial Fulfillment of the

Requirement for the Award of the Degree of

Bachelor of Commerce (NEP)

Faculty Mentor: Submitted By:

Mrs. Neha Raitani Sudarshan Harsh

Asst. Professor B.Com 6th Sem.

Faculty of Commerce Room No. 57

Roll No.: 2110402010970

Faculty of Commerce
Shri Jai Narain Misra PG College (KKC), Lucknow
(Accredited 'A' Grade by NAAC) (An Associated College of
University of Lucknow, Lucknow)

1
 CERTIFICATE

I here by certify that the minor project report title “A STUDY OF FINANCIAL
CONDITION REGIONAL RURAL BANK” submitted by Sudarshan Harsh in
fulfillment the requirement of minor project in commerce (B.COM 6 SEMESTER )
From Sri Jai Narayan PG College Lucknow is bonafied record of original research
work carried out by her under the supervision and guidance of me.

Signature of Guide
Mrs. Neha Raitani
Assistant Professor
Department Of Commerce

Counter Singed
Prof. K.K Shukla
Faculty Incharge
Department of commerce

2
 STUDENT DECLARATION

I undersigned, hereby declare that the project titled “A STUDY OF

MARKETING CONDITION REGIONAL RURAL BANK” submitted

in partial fulfilment for the award of Degree of Bachelor of Commerce is a

Bonafede record of work done by me under the guidance of Mrs. Neha Raitani

This report has not previously formed the basis for the award of any degree,

diploma, or similar title of any University.

Place: Lucknow

Date:

Signature of the Student

Sudarshan Harsh
2110402010970

3
 ACKNOWLEDGEMENT

No project report ever reflects the efforts of a single individual. The report owes its

existence to the constant support and guidance of people. I am grateful to all of them. I owe

a never-ending debt of gratitude to Mrs. Neha Raitani for their expert guidance and

support. I would like to thank all the respondents for giving their valuable time and

providing useful information. I am also grateful to all those who have either directly or

indirectly contributed toward the completion of the project, for their support and

encouragement.

4
 TABLE OF CONTENT

SR. NO. TITLE PAGE NO.

1. INTRODUCTION 7-9

2. BANKING POLICY IN RURAL INDIA 10-13

3. DISTRIBUTION CHANNEL OF RURAL 14-17

BANKING

4. MARKETING STRATEGIES OF RURAL 18-28

BANKING PLAYERS IN INDIA

5. INSTITUTIONAL CREDIT FOR RURAL INDIA 29-32

6. MAJOR RURAL BANKING PLAYERS IN INDIA 33-35

7. OBJECTIVE OF THE STUDY 36-37

8. RESEARCH METHODOLOGY 38-42

9. DATA ANALYSIS AND INTERPRETATION 43-53

10. CONCLUSION 54-55

11. REFERENCE 56

5
INTRODUCTION

6
 INTRODUCTION
Rural banking in India has been the subject of study Survey Committee Report in 1954,
literally thousands of reports have examined and investigated the problems relating to the
credit delivery for agriculture and rural area. Latest magnum opus on the subject is the
National Agricultural Credit Review report 2000. The Expert Committee on Rural Credit
(Chairman: Professor V.S.Vyas) submitted its report in 2002.One more High Power
Committee headed by Professor Vyas set up by the Reserve Bank of India recently to review
and advice on improving credit delivery to agriculture has also given its report.

As the majority of the Indian population lives in rural areas,

there is an urgent need to deliver citizen services to them in a cost effective way with assured
quality. This involves mainly the following:
1. Enabling the ready access at the place of the villagers.
2. Reducing transaction cost to make the services affordable.
3. Reduction in delays.
4. Improving the quality of services available.

The criticality of this need may be seen from the fact that
even with concerted and extensive attempts to meet the credit needs of the farmers for
agricultural operations etc., informal agencies including money lenders are currently
providing substantial portion of the total credit to this sector. Besides, the agricultural credit
flows themselves are inadequate and the gross capital formation can be improved only if
substantial amount of investment funds flow to the rural areas in the form of credit. Likewise,
there is also a need to provide market information, extension services, marketing support and
government and other public services to the people in a cost-effective manner. For achieving
financial inclusion and economic growth, the ICT can play an important role by increasing
effective access and improving delivery and governance in banking services. Against this
background, the key issue is how technology can be harnessed for improving the efficacy of
the credit delivery and for the minimization of the transaction costs involved, for ensuring
that bank credit actually increases and promotes productive
capital formation and investment in rural areas and helps address the critical problem of the
rural-urban service divide.

7
The Rural Economy
Financial liberalization after 1991 decimated the formal system of institutional credit in rural
India. It represented a clear and explicit reversal of the policy of social and development
banking, such as it was, and contributed in no small way to the extreme deprivation and
distress of which the rural poor in India have been victims over the last decade. This paper
examines the impact of changes in banking policy and structure on the rural economy, and on
the rural poor in particular.
Financial liberalization is a crucial component of the programmes of economic reforms that
are being imposed on the people of less-developed countries. The demand that financial
markets be liberalized quickly is high on the agenda of imperialism; in India as well,
advocates of economic “reform” see financial liberalization as being at the core of structural
adjustment. There are many components of the package of reforms associated with financial
liberalization in India. Chandrasekhar and Ghosh (2002) classify the policies of financial
liberalization in India into three types: first, policies to curtail government intervention in the
allocation of credit, secondly, policies to dismantle the public sector and foster private
banking, and thirdly, polices to lower capital controls on the Indian banking system.
It is well known that the burden of indebtedness in rural
India is very great, and that despite major structural changes in credit institutions and forms
of rural credit in the post-Independence period, the exploitation of the rural masses in the
credit market is one of the most pervasive and persistent features of rural life in India. Rural
households need credit for a variety of reasons. They need credit to meet short-term
requirements of working capital and for long-term investment in agriculture and other
income-bearing activities. Agricultural and non-agricultural activities in rural areas typically
are seasonal, and households need credit to smoothen out seasonal fluctuations in earnings
and expenditure. Rural households, particularly those vulnerable to what appear to others to
be minor shocks with respect to income and expenditure, need credit as an insurance against
risk. In a society that has no law of free, compulsory and universal school education, no
arrangements for free and universal preventive and curative health care, a weak system for
the public distribution of food and very few general social security programmes, rural
households need credit for different types of consumption. These include expenditure on
food, housing, health and education. In the Indian context, another important purpose of
borrowing is to meet expenses on a variety of social obligations and rituals.

8
 If these credit needs of the poor are to be met, rural
households need access to credit institutions that provide them a range of financial services,
provide credit at reasonable rates of interest and provide loans that are unencumbered by
extra-economic provisions and obligations.

Historically, there have been four major problems with

respect to the supply of credit to the Indian countryside. First, the supply of formal sector
credit to the countryside as a whole has been inadequate. Secondly, rural credit markets in
India themselves have been very imperfect and fragmented. Thirdly, as the foregoing
suggests, the distribution of formal sector credit has been unequal, particularly with respect to
region and class, caste and gender in the countryside. Formal sector credit needs specially to
reach backward areas, income-poor households, people of the oppressed castes and tribes,
and women. Fourthly, the major source of credit to rural households, particularly income-
poor working households, has been the informal sector. Informal sector loans typically are
advanced at very high rates of interest. Further, the terms and conditions attached to these
loans have given rise to an elaborate structure of coercion – economic and extra-economic –
in the countryside.
That these constitute what may be called the “problem of
rural credit” has been well recognized; recognized, in fact, in official evaluations and
scholarship since the end of the nineteenth century. Given the issues involved, the declared
objectives of public policy with regard to rural credit in the post-Independence period were,
in the words of a former Governor of the Reserve Bank of India, “to ensure that sufficient and
timely credit, at reasonable rates of interest, is made available to as large a segment of the
rural population as possible” (Rangarajan 1996, p. 288). The policy instruments to achieve
these objectives were to be, first, the expansion of the institutional structure of formal-sector
lending institutions; secondly, directed lending, and thirdly, concessional or subsidized credit
(ibid.). Public policy was thus aimed not only at meeting rural credit needs but also at
pushing out the informal sector and the exploitation to which it subjected borrowers. Rural
credit policy in India envisaged the provision of a range of credit services, including long-
term and short-term credit and large-scale and small-scale loans to rural households.

9
BANKING POLICY IN
RURAL INDIA

10
 BANKING POLICY IN RURAL INDIA
BANKING POLICY IN RURAL INDIA: 1969 TO THE
PRESENT
The period from 1969 to the present can be characterised as representing, broadly speaking,
three phases in banking policy vis-à-vis the Indian countryside. The first was the period
following the nationalization of India‟s 14 major commercial banks in 1969. This was also
the early phase of the „green revolution‟ in rural India, and one of the objectives of the
nationalization of banks was for the state to gain access to new liquidity, particularly among
rich farmers, in the countryside. The declared objectives of the new policy with respect to
rural banking - what came to be known as “social and development banking” - were (i) to
provide banking services in previously unbanked or under-banked rural areas; (ii) to provide
substantial credit to specific activities, including agriculture and cottage industries; and (iii)
to provide credit to certain disadvantaged groups such as, for example, Dalit and Scheduled
Tribe households

The introduction of social and development banking policy entailed a radical shift from
prevalent practice in respect of the objective and functioning of commercial banks. An
important feature of the policy of social and development banking was that it recast
completely the role of commercial banks in rural banking. Prior to 1969, the countryside was
5
not considered to be the problem of commercial banks. It was only after 1969 that a multi-
institutional approach to credit provision in the countryside became policy, with commercial
banks, Regional Rural Banks and cooperative institutions establishing wide geographical and
functional reach in the Indian countryside.
The Reserve Bank of India (RBI) issued specific directives with respect to social and
development banking. These included setting targets for the expansion of rural branches,
imposing ceilings on interest rates, and setting guidelines for the sectoral allocation of credit.
Rural credit was an important component of the „green revolution‟ package; the first post-
nationalization phase of expansion in rural banking saw a substantial growth in credit
advances for agriculture. Specifically, a target of 40 per cent of advances for the “priority
sectors,” namely agriculture and allied activities, and small-scale and cottage industries, was
set for commercial banks. Advances to the countryside increased substantially, although they

11
 6
were, as was the green revolution itself, biased in respect of regions, crops and classes. The
two main crops that gained from the green revolution, as is well recognized, were wheat and
rice, and the application of the new technologies was primarily in the irrigated areas of the
north-west and south of India, with the benefits concentrated among the richer classes of
cultivators.

In 1975, the Government established by ordinance and then legislation a new network of
rural financial institutions called the Regional Rural Banks (RRBs), which were promoted by
the Government of India, State governments and commercial banks. These were created on
the basis of recommendations by a working group on commercial credit, also called the
Narasimham Committee, and were intended to “combine the cooperatives‟ local feel and
7
familiarity with the business acumen of commercial banks” (Jagan Mohan, 2004, p 22). The
number of such banks expanded rapidly, and covered 476 districts by 1987

The second phase, which began in the late 1970s and early 1980s, was a period when the
rhetoric of land reform was finally discarded by the ruling classes themselves, and a period
when the major instruments of official anti-poverty policy were programmes for the creation
of employment. Two strategies for employment generation were envisaged, namely wage-
employment through state-sponsored rural employment schemes and self-employment
generation by means of loans-cum-subsidy schemes targeted at the rural poor. Thus began a
period of directed credit, during which credit was directed towards “the weaker sections.”
The most important new scheme of this phase was, of course, the Integrated Rural
Development Programme or IRDP, a scheme for the creation of productive income-bearing
assets among the poor through the allocation of subsidized credit. The IRDP was initiated in
1978-79 as a pilot project and extended to all rural blocks of the country in 1980. There is
much writing on the failure of IRDP to create long-term income-bearing assets in the hands
8
of asset-poor rural households. Among the many reasons for this failure were the absence of
agrarian reform and decentralized institutions of democratic government, the inadequacy of
public infrastructure and public provisioning of support services and the persistence of
employment-insecurity and poverty in rural society. Nevertheless, the IRDP strategy did lead
to a significant transfer of funds to the rural poor.

The second phase also involved an expansion and consolidation of the institutional
infrastructure of rural banking. “Even ardent critics of India‟s growth strategy,” wrote a noted
scholar of India‟s banking system, “would admit that what the country achieved in the area of
12
financial sector development before the present reform process began, particularly after bank
nationalization, was unparalleled in financial history” (Shetty 1997, 253). After bank
nationalization, as Shetty points out, there was “an unprecedented growth of commercial
banking in terms of both geographical spread and functional reach”
The third and current phase, which began in 1991, is that of liberalization. The policy
objectives of this phase are encapsulated in the Report of the Committee on the Financial
System, which was chaired, ironically, by the same person who recommended the
establishment of Regional Rural Banks, M. Narasimham (RBI, 1991). In its very first
paragraph, the report called for “a vibrant and competitive financial system…to sustain the
ongoing reform in the structural aspects of the real economy.” The Committee said that
redistributive objectives “should use the instrumentality of the fiscal rather than the credit
system” and, accordingly, that “directed credit programmes should be phased out.” It also
recommended that interest rates be deregulated, that capital adequacy norms be changed (to
“compete with banks globally”), that branch licensing policy be revoked, that a new
institutional structure that is “market-driven and based on profitability” be created, and that
the part played by private Indian and foreign banks be enlarged.
Let us make it clear that, before the 1990s, the banking system was open to much criticism,
particularly of its bureaucratic failures, its insensitivity to the social and economic contexts in
which it functioned, and class and regional inequalities in lending patterns. The reforms
proposed in 1991, however, were not attempts to bring rural banking closer to the poor, but to
cut it back altogether and throw the entire structure of social and development banking
overboard.

13
 DISTRIBUTION
CHANNEL OF RURAL
BANKING

14
DISTRIBUTION CHANNEL OF RURAL BANKING - MULTI-AGENCY
APPROACH TO RURAL LENDING
Rural credit has been a laboratory for various policies, initiatives, investigations and
improvements since 1955.The first major strategy adopted for improving rural credit delivery
was the institutionalization of the credit delivery system with the cooperative as the primary
channels. The multi-agency approach to the rural credit delivery emerged with the induction
of the commercial banks into the scene. In 1979, specialized institutions called Regional
Rural Banks and subsequently, another breed of institutions called Local Area Banks, came
on the scene. With the operationalisation of the Lead Bank Scheme, the area approach to
rural lending was formalized and attempts were made to match infrastructure development
with bank credit flows for ensuring development of the rural areas. The Scheme sought to
give a special supply-leading role to the banking system in rural development and also to
ensure access of the rural population to bank services through rural branch expansion. A
multi-agency credit delivery system is in place for financing credit-based development
activities, under the Lead Bank Scheme. In 1988, the Service Area Approach was also
introduced as a strategy for improving the quality of rural lending. The Lead Bank Scheme
Information System and Service Area Monitoring Information System (SAMIS) have also
been operationalised using monitoring arrangements. The micro-finance and linkage of the
banks to the self- helpgroups / NGOs and the issue of Kisan Credit Cards are among the
recent developments in the area of rural lending in India. The latest policy initiatives are the
enabling of the Non-bank Financial Companies and of the “correspondent “banking for
increasing delivery of rural credit.

The National Agricultural Credit Review Committee (NACRC) headed by Prof. A S Khusru
has established that the cost of rural lending by commercial banks and cooperative banks is
unsustainable and does not break even In fact, it has been sustained through cross
subsidization. The two elements of the costs namely, capital costs and the current expenses
are of the rural branches. Rural bank branches are such that the transaction in the rural area
cannot support them.

The experiment of having low cost institution for rural lending in the form of Regional Rural
Banks also has not been successful in as much as the RRB staff expenses are required by law
to be on par those of the commercial banks. Therefore, it is clear that the rural credit delivery

15
system is not performing efficiently and in a cost effective manner. It is against this
background that we position a technology based solution for improving the speed efficiency
and effectiveness of the credit delivery of the rural people through the application of
information technology tools and systems. We propose Model for using
Information Technology for improving rural credit delivery system by reducing the cost,
increasing the speed of delivery and also increasing the value addition in the service delivery
and improving the accountability.
The National Agricultural Credit Review Committee Report documents the history,
development and the status of the various important issues involved in rural credit delivery in
India in great detail. It is interesting to know from this voluminous report that solutions have
been advised and implemented for almost all the real as well as “perceived” problems in rural
credit. Yet, this area remains a problem defying adequate solution. For example, some of the
key concerns like the end-use of credit, infrastructure gaps, and the high costs of lending have
been repeatedly attended to. Despite that, the delivery of credit for agriculture and rural
development still remains unsatisfactory.

It has been a matter of concern that the multi- institutional rural credit delivery system has not
been very successful in delivering required amount of credit to agriculture and small scale
industries and small and medium enterprises.i The share of bank credit for agriculture has
declined from 17.6 percent in 1985 to 9.8 percent in 2002.i The institutions are in place, the
systems repeatedly revamped several times on the basis of multiple committees are also
in place. In spite of this, the growths of the agricultural credit in the country during the last
three years have been less than the growth of credit for services and corporate sector. The
value addition to the GDP by the agriculture has been low as compared to the industry sector
and the services sector. The income disparities as reflected in the poverty are still a matter of
serious concern.

Various approaches have been adopted for improving rural credit from time to time. It was
felt that project lending will revolutionize rural credit. This was followed by area approach
and extension- based schemes and then the lead bank scheme providing for forward and
backward linkages and the scheme of linking banks to Primary Agricultural Credit Societies
and the linkage of bank to microfinance institutions. Under the hypothesis that social factors
like education, training and social pressures have critical bearing on the credit off-take and its
productive deployment in rural areas; several attempts have been made and are being made to
16
address them. Accordingly, the group-lending, the family approach and entrepreneurial
development programme, the involvement of NGOs and voluntary agencies, the social
groups and the use of self-help-groups are all being tried out for channeling adequate credit to
agriculture and rural sectors. With considerable enthusiasm followed by disappointment, the
cooperatives were positioned as the primary, rather the exclusive channel, for rural credit
delivery for about two decades and the latest reports on the cooperatives is that, by and large,
they themselves require assistance rather than being of any assistance to the farmers. Despite
concerted efforts by a multitude of agencies, the agricultural credit delivery still remains a
problem. The 2003 November Review of the Monetary and Credit Policy takes up this and
provides for the constitution of an Advisory Committee to review the various exiting
arrangements and “to suggest appropriate changes in the institutional and procedural
arrangements for the smooth flow of credit to agriculture” The Policy also states that the
Committee is “expected to help in capturing technological developments in the cause of
improving credit delivery” [4].
Despite the large number of initiatives, the rural credit delivery system still requires
improvements. Credit off-take and its quality have to increase to facilitate rural capital
formation, employment and growth. The speed of loan processing should be faster and the
cost of delivery should be reduced. These issues are currently relevant and important and
have been identified as such in the November 2003 credit policy statement of the Reserve
Bank of India as well.

17
 MARKETING
STRATEGIES OF RURAL
BANKING PLAYERS IN
INDIA

18
To echo the thoughts of C.K. Prahalad, the “bottom of the pyramid” segments will be the
growth drivers of the future – this is certainly being borne out by the market revolution that is
taking place in India‟s villages. The Narasimham committee on rural credit recommended
the establishment of Regional Rural Banks (RRBs) in meeting the needs of rural areas.

Indian mobile banking has two major segments: the urban segment and the rural segment.
Celent estimates that urban mobile banking subscribers will reach 65 million by 2012. The
rural mobile segment represents a huge opportunity to bank the unbanked population, thereby
adding a revenue stream.

In a new report, Mobile Banking in India; Dual Strategy for Rural and Urban Segments,
Celent explains the mobile banking ecosystem in India and looks at the trends driving the
growth in its urban and rural subsegments. The report looks at the prospects of mobile
banking from both a regulatory perspective and an industry perspective.

In India‟s urban segment, mobile banking is an enabling fifth channel, and in the rural
segment, mobile banking is a primary mode of financial inclusion. In both segments, the two
fundamental factors affecting the growth of mobile banking are regulations and technology.
Nontransactional users will remain the majority in India because they will continue to use
online banking and other payment mechanisms. Government-to-person (G2P) payments will
be the major growth driver for rural mobile banking. Regulatory changes are also a big
driver. Celent believes that, by 2012, over 60 million rural users will be beneficiaries of
mobile banking through business correspondence.

19
“While the urban banking market is dominated by information services, the payment
transactions segment has not picked up mainly due to regulatory limitations,” says Rajesh M
R, an analyst with Celent and coauthor of the report. “However, recent relaxation of payment
norms by RBI has presented a huge opportunity for this segment.”

“The rural mobile banking segment is a high growth area, due to the adoption of the business
correspondent model and relaxed Know Your Customer norms, but financial literacy remains
a big issue for retaining the rural adopters,” says Sreekrishna Sankar, Celent analyst and
coauthor of the report.

Marketing strategy and

The Reserve Bank of India has a mandate to be closely involved in matters relating to rural
credit and banking by virtue of the provisions of Section 54 of the RBI Act. The major
initiative in pursuance of this mandate was taken with sponsoring of All-India Rural Credit
Survey in 1951-52. This study made agency-wise estimates of rural indebtedness and
observed that cooperation has failed but it must succeed. The Report of the Committee on
Directions is still considered a classic on the subject, and two of the four members were,
incidentally, from Andhra Pradesh. This is the origin of the policy of extending formal credit
through institutions while viewing local, traditional and informal agencies as usurious. In the
first stage, therefore, efforts were concentrated on developing and strengthening cooperative
credit structures. The Reserve Bank of India has also been making financial contributions to
the cooperative institutions through evolving institutional arrangements, especially for
refinancing of credit to agriculture.

While enacting the State Bank of India Act in 1955, the objective was stated to be the
extension of banking facilities on a large scale, more particularly, in rural and semi-urban
areas. SBI, therefore, became an important instrument of extending rural credit to supplement
the efforts of cooperative institutions. In 1969, 14 major commercial banks were nationalised
and the objective, inter alia, was "to control the heights of economy". The nationalised banks
thus became important instruments for advancement of rural banking in addition to
cooperatives and State Bank of India. The next step to supplement the efforts of cooperatives
and commercial banks was the establishment of Regional Rural Banks in 1975 in different
states with equity participation from commercial banks, Central and State Governments.
By 1982, to consolidate the various arrangements made by the RBI to promote/ supervise
20
institutions and channel credit to rural areas, NABARD was established. Though several
efforts were made to increase the flow of institutional credit for agricultural and rural lending,
there were mismatches in credit and production. Field studies conducted to determine the
reason revealed that it was due to absence of effective local level planning. It was felt that
with the establishment of large network of branches, a system could be adopted to assign
specific areas to each bank branch in which it can concentrate on focussed lending and
contribute to the development of the area. With a view to implementing this approach, RBI
introduced a scheme of "Service Area Approach" for commercial banks. To further
supplement the institutional mechanism, the concept of Local Area Banks was taken up in
1996-97 and in-principle approval has been given for 8 Local Area Banks.
As regards cost of credit, for most of the period, the administered interest rate regime was
applicable for bank lending and this included concessional terms for priority sector.
Currently, all interest rates on bank advances including in rural areas are deregulated and
there is no link between priority sector and interest rate, though there are some regulations on
interest rates by size of advance i.e. below Rs. 2 lakh in respect of commercial banks.
As regards policy measures to enhance flow of credit to rural areas, apart from availability of
credit lines from the Reserve Bank of India, the concept of priority sector was evolved to
ensure directed credit. Currently, the stipulation is that domestic commercial banks should
extend credit to the extent of 40 per cent of the total net bank credit to priority sector as a
whole, of which 18 per cent should be specifically for agriculture. Out of the target of 18 per
cent for agriculture, at least 13.5 per cent should be by way of direct loans to agriculture and
remaining could be in the form of indirect loans.
Where a bank fails to fulfil its commitment towards priority sector lending, it is currently
required to contribute to Rural Infrastructure Development Fund set up by NABARD.
NABARD in turn provides these funds to State Governments and state owned corporations to
enable them to complete various types of rural infrastructure projects. It is pertinent to
recognise that there are a large number of credit linked programmes sponsored by the
Government for direct assault on poverty. In programmes relating to self-employment and
women welfare, the multiplicity of programmes has been reduced by having a comprehensive
and consolidated programme named Swaranjayanti Gram Swarojgar Yojna. The financial
sector reforms, which were introduced from 1991 onwards were aimed at transforming the
credit institutions into organisationally strong, financially viable and operationally efficient
units. The measures introduced include reduction in budgetary support and concessionality of
resources, preparation of Development Action Plans and signing of Memoranda of
21
Understanding with the major controllers, and introduction of prudential norms relating to
income recognition and asset classification for RRBs and cooperative banks. The lending
rates for these institutions have also been deregulated. Other measures of liberalisation
include allowing non-target group financing for RRBs, direct financing for SCBs and CCBs,
and liberalisation in investment policies and non-fund business.
These measures have contributed to many RRBs turning around and becoming more vibrant
institutions. In the case of cooperative banks, there is greater awareness of the problems of
officialisation and politicisation and initiatives in this regard include legislative actions on
cooperative banks in Andhra Pradesh.
Recently, several policy initiatives have been taken to advance rural banking. These includ
additional capital contribution to NABARD by the RBI and the Government of India,
recapitalisation and restructuring of RRBs, simplification of lending procedures as per the
Gupta Committee recommendations, preparation of a special credit plans by public sector
banks and launching of Kisan Credit Cards. Finally, a scheme linking self-help groups with
banks has been launched under the aegis of NABARD to augment the resources of micro
credit institutions. A Committee has gone into various measures for developing micro credit,
and has submitted its report, which is under the consideration of the RBI. In respect of
cooperatives, a Task Force
under the chairmanship of my esteemed and affectionate colleague Shri Jagdish Capoor,
Deputy Governor has been constituted to review the status and make recommendations for
improvement.
Undeniably, these initiatives have enabled a very wide network of rural financial institutions,
development of banking culture, penetration of formal credit to rural areas and a counter to
the dominance of moneylenders. These initiatives have also financed modernisation of rural
economies and implementation of anti-poverty and self-employment programmes. However,
for the purpose of focussing on the future, generalisation on some concerns regarding the
current approach to rural credit and banking would be appropriate.

Marketing strategy and Rural Credit Markets: New Realities

As mentioned earlier in the approach to rural banking, the basic thrust of our policy has been
to promote institutional credit and eliminate or ignore informal finance. However, in reality,
while formal credit has expanded its share, informal finance continues to be significant. The
idea of promotion of Self-Help Groups and micro financing is an indirect admission of
22
necessity of informal finance. The future of rural banking cannot be appreciated without fully
understanding both formal and informal rural credit markets, especially their linkages. Since
in the earlier sections, organisation and functioning of the formal credit system in the rural
areas has been explained, in this section nature of informal markets and the linkages will be
explored.
The informal financial market which is legal but officially unrecorded comprises unregulated
financial activities i.e., outside the orbit of officially regulated financial intermediaries. In the
informal financial transactions, one could treat borrowing and lending among friends and
relatives as occasional and not part of such an informal market. Consequently, there are three
broad types of informal financial transactions, viz., well-defined group, tied-
lending/borrowing; and untied lending/borrowing activities. In the literature on well-defined
groups, there are three broad types namely Rotating Savings and Credit Associations
(ROSCA); Accumulated Savings and Credit Associations (ASCRA) and hybrid forms of
both. There are some variations under each category. Basic characteristics of these groups are
that they are voluntary in nature, usually among equals, with little or no outside support or
interference. Often, members have some special bonds based on religion, caste, status,
neighbourhood, etc. In brief, there is no patronclient framework. In essence, therefore, these
arrangements among well-defined groups, though important, should not in my view be
included in the concept of informal financial markets. In the recent past, there have been
efforts to provide a bridge between formal financial markets and these well-defined groups in
the form of „micro-finance' initiatives. However, these initiatives do not constitute
marketisation of activities of well-defined groups. Thus, the informal financial markets are
those which are outside the orbit of officially regulated institutions. These informal debt
transactions may involve tied debt transactions and untied debt transactions. The general
approach, at least at the policy level, to informal market whether tied or untied, has not been
positive since informal debt market has been historically equated with either landlord or
moneylender. The transactions are considered to be expensive, especially in view of what is
held to be of usurious nature of interest rates. It is considered to be financing unproductive
expenditures since consumption needs are financed. Sometimes, it is said that there are often
unequal and exploitative arrangements, say, between the landlord and the tenant or the
agricultural labourer. Finally, it is held that, since these are unregulated, they are prima facie
not desirable.
Yet, the fact remains that informal debt markets do prevail, and studies have shown that in
some areas in our country, they account for 70 to 80 per cent of debt transactions. Studies
23
have also shown that many poor people have no access to institutional credit. The
arrangements in informal debt markets are said to be flexible, and sometimes have in-built
risk sharing arrangements. These credit arrangements do provide for smoothening of
consumption and production requirements. Transaction costs in terms of certainty, timeliness,
procedural requirements, number of trips, etc. are somewhat negligible although there may be
hidden costs in tied lending. Moreover, while formal markets tend to cater to less risky
borrowings, informal markets provide for the more risky borrowings and thus serve a
purpose. Finally, it has been stated in the literature that financial repression like directed
credit, high reserve ratios, interest rate ceilings, branch licensing, etc. make informal financial
markets relatively attractive and popular.
Perhaps, one way of reconciling the conflicting views on usefulness of informal credit is to
recognise some emerging realities of both formal and informal markets. This would also help
a rethink on approaches to rural credit and rural banking. First, it is no longer the case that the
money lender and informal financing are always synonymous, in view of the dynamics of
rural economy already described involving suppliers credit, buyers credit and credit for
services sector. Second, informal markets are less significant now than before, and have to
face competition or at least accept benchmarking of formal credit. The concept of monopoly
of moneylender in rural areas is not true in many areas now.
Third, when informal financial market is linked to socially undesirable activities, there is
certainly a cause for concern though the available evidence shows that such a link is more a
metropolitan or urban phenomenon rather than a rural one.
Fourth, bank credit is really not severely restricted to what can be officially determined as
productive, since most of the credit-card financing by the banks is, in fact, financing of
consumption and at interest rates comparable to those prevailing in the rural informal debt
markets. In other words, it is no longer unethical for banks to finance consumption credit
through the credit card route. Credit card business, so far, is an essentially urban
phenomenon. Hence, the financing of consumption by informal markets in rural areas cannot
be frowned upon when it is being done by banks through their credit card business.
Fifth, the real extent of informal markets is grossly understated in any survey that views data
on outstanding debt since the turnover of debt is admittedly much lower for public
institutions than for private lending. The turnover-differential is on account of several factors,
including preference for short term finance and better recovery-performance in informal
markets. Sixth, the social significance of informal credit is more than its proportion in
financial terms since the poorer sections draw far larger amounts from informal than formal
24
markets. Seventh, a significant part of informal market is through leasing, hire purchase,
deferred payment, etc. with finance often provided by NBFCs. The informal market is
providing a range of financial products, which the formal banking system is not able to.
Eighth, studies have demonstrated that expansion of literacy and education tends to increase
the access of rural folk to formal credit, reduce the informal transaction costs in dealings with
formal credit institutions and improves their resistance to malpractices attributable to landlord
or moneylender. The exploitative nature of informal markets is more pronounced in tribal or
less developed areas while productive nature of informal markets is more pronounced in
prosperous villages. Indeed, one can argue that in many areas, the formal credit structure has
provided a positive institutional alternative to the moneylenders and thus marginalising his
role in providing credit to rural masses.
Marketing strategy and Linkages in Rural Debt Markets

Having recognised that one cannot wish away informal markets, some tentative
generalisations on the relative roles of formal and informal markets and on the linkages
between them would also be necessary to capture the emerging but complex realities. Such
generalisations are possible on the basis of empirical studies.
First, the formal credit has a tendency to flow more easily to agriculturally developed regions
and to relatively larger farmers leaving the backward regions and small farmers to be largely
served by the informal market. This phenomenon is generally explained by four factors viz.,
poor-resource endowment features of the borrower, poor personal factors (education, social
contact etc), underdevelopment of a region and higher transaction costs.
Second, as per empirical studies, transaction costs associated with formal credit include fees
for procuring necessary certificates (open), travel and related expenses including loss of
wages etc., and informal or unofficial commissions (hidden). The transaction costs vary with
type of credit agency involved, the type of borrower and farm-size.
Third, uncertainties and delays usually associated with formal credit can also be treated as
additions to the transaction costs.
Fourth, the true cost of borrowing from the formal credit system is thus higher than nominal
cost if the above informal transaction costs are also included. To the extent some transaction
costs are fixed, the effective cost of borrowings for smaller loans tends to be relatively higher
than for a larger loan.
Fifth, there are usually hidden costs or concealed interest rates in respect of informal credit
also, which have to be added to the nominal costs to arrive at the true cost. These hidden
25
costs generally relate to tied lending, tied to land, labour, input or output. The tied advance in
respect of labour is particularly relevant for migratory labour. The hidden costs are usually in
the form of undervaluation of labour and output of borrowers and overvaluation of inputs
supplied by lender.
Sixth, the choice between formal and informal credit depends on both the access and relative
true costs. Thus, recourse to informal credit, admittedly at far higher nominal costs, is to be
explained partly in terms of effective costs and the extent of supply of formal credit. Seventh,
in assessing relative roles, both supply and demand side bottlenecks of formal credit need to
be appreciated. The former relate to asset-based lending policies and complex formalities
and procedures, while the latter relate to poor endowment, lower education and social-
contact, usually caste-based in backward regions. Viewed differently, a larger role for
informal credit may arise due to low level of commercialisation and monopoly power of
moneylender; and it may also arise due to high level of commercialisation of agriculture
when supply from formal channel cannot match significant demand for credit.
Eighth, it is also necessary to recognise that, to the extent informal markets tend to lend to
borrowers who are relatively less creditworthy, risk-premium is bound to be higher. This
would also get reflected in higher nominal interest rates in informal markets and indeed
higher true cost, though it may not be so high if it is net of risk premium.
It is clear that the critical issue in respect of informal credit is the manner in which the
linkages among the participants in the market operate and result in varying degrees of hidden
costs. It is possible to make some exploratory postulates here. First, trader-lenders are likely
to provide most of production - credit, while farmer-lender or moneylender is likely to
provide most of consumption - credit. It is, of course, possible that some individuals combine
the functions of farmer, trader and moneylender. Second, informal markets are unlikely to
finance credit for investment purposes, given the time preference. Third, the levels of
education are likely to reduce the scope for gross overvaluation or undervaluation in linked-
transactions. Fourth, the inter-linked transactions among parties with equal bargaining power
are likely to minimise the hidden costs. Fifth, from the supply side, farmer-lenders may tend
to be associated with land and labour market linkages while trader-lender is likely to be
associated with input-output markets. On the demand side, agricultural labour may be
associated with land and labour markets while the farmer-cultivator with input-output
linkages. In the process, it is likely that a farmer would be a borrower from a trader and a
lender to agricultural labour, a common phenomenon in villages. It will, therefore, be over
simplification to divide the rural population into lenders and borrowers or exploiters and
26
exploited. Sixth, similarly it is necessary to appreciate the role of linkages in credit-risk-
mitigation. In fact, the risk reducing element of linkages are not built into formal credit-
channels. Incidentally to the extent the transaction costs are front loaded in respect of formal
credit, there is no incentive to repay while the true costs of informal credit are spread out.
Seventh, in terms of bargaining power among the class of borrowers, the agricultural labour
and migratory labour appear to be weakest except in agriculturally prosperous areas where
labour-shortage is acute to cater to agricultural and other operations. Similarly, the
differential in bargaining power between large and small borrowers is similar to that between
large corporate and small-industrialists in urban areas.
In brief, the linkages between formal and informal markets are complex, contextual and
dynamic. The two markets appear to compete with and also supplement each other.

Technology and marketing strategy

We should recognise that the role of banks, which is central to formal credit in rural areas, is
fast changing. Many non-banks are providing avenues for savers and funds for investment
purposes. Banks themselves are undertaking non-traditional activities. Banks are also
becoming what are called universal banks and are already providing a range of financial
services such as investments, merchant banking and even insurance products. Similarly, non
banks are also undertaking bank like activities. At present in India, these are mostly confined
to urban areas, but they will sooner than later spread to rural areas.
Another development relates to the gradual undermining of the importance of branches of
banks. The emergence of new technology allows access to banking and banking services
without physical direct recourse to the bank premise by the customer. The concept of
Automated Teller Machines (ATMs) is the best example. At present, ATMs are city oriented
in our country. It is inevitable that ATMs will be widely used, in semi-urban and rural areas.
The technology-led process is leading us to what has been described as virtual banking. The
benefits of such virtual banking services are manifold. Firstly, it confers the advantage of
lower cost of handling a transaction. Secondly, the increased speed of response to customer
requirements under virtual banking vis-à-vis branch banking can enhance customer
satisfaction.
Thirdly, the lower cost of operating branch network along with reduced staff costs leads to
cost efficiency. Fourthly, it allows the possibility of improved quality and an enlarged range
of services being available to the customer more rapidly and accurately at his convenience. It
27
may not be possible to deny these facilities to rural areas in our country since, if banks do not
provide them, some non-banks will do it.
Another development relates to the increasing popularity of credit cards, which are bound to
reach rural areas. Many Public Sector Banks are already in credit card business. In fact,
multipurpose cards could be a facility that IT could usher in for rural population. The
potential can be illustrated with SMART cards. SMART cards – which are basically cards
using computer circuits in them thereby making them „intelligent' – would serve as
multipurpose cards. SMART cards are essentially a technologically improved version of
credit and debit cards and could be used also as ATM cards. They could be used for credit
facilities at different locations by the holders. SMART cards could also be used for personal
identification and incidentally for monitoring credit usage.
For the spread of virtual-banking and SMART cards to rural areas, it is essential that electric
power and telecom connectivity are continuous and supplies do not drop especially during the
hours when a bank's transactional activity is at relatively high levels. The banks could, under
such assured supply conditions acquire the required banking software and also put in place
the necessary networking for providing anywhere banking facilities in rural and semi-urban
areas also.
Like banks in other parts of the world, Indian banks will have to get interested in providing
diversified range of financial products and services along with those that they are already
providing, by using technological advances. As the level of education in rural areas rises and
affluence spreads, customers will start seeking efficient, quicker and low cost services. As the
financial system diversifies and other types of financial intermediaries become active, in rural
areas, savers would turn towards mutual funds or the savers themselves decide to deploy part
of their financial surpluses into equities and debentures as also other fixed income securities.
The bulk of bank deposits in the rural areas are currently longer term deposits and as these
come down, there would be a distinct shortening of the average maturity structure of bank
deposits with an increase in asset liability mismatches. The spreads that the banks now enjoy
will progressively shrink making it more difficult for them to survive. As more and more
intermediaries enter rural areas with greater level of technology, traditional banking business
will come under pressure. In order to face the competitive pressures being exerted by the
recently set up market savvy banks, banks which have extensive branch network in most of
the existing and potential rich rural and semi-urban areas may have to provide such services.

28
INSTITUTIONAL CREDIT
FOR RURAL INDIA

29
 INSTITUTIONAL CREDIT FOR RURAL INDIA
In April-May 2004, the Indian electorate delivered a
dramatic judgement on economic policy. Thirteen years of neoliberal economic policy
(further intensified in the last five to six years) had taken their toll, and there is general
agreement among serious political observers that the election results represented widespread
protest, rural and urban, against the collapse of livelihoods among the mass of the people. If
policy is to repair the damage done to the rural economy, India needs large-scale public
investment in the countryside. The links between rural distress and the near-collapse of the
formal sector of bank is well recognised, and it is no surprise that one of the promises of the
new Government was that it would double the flow of rural credit in three years.

The purpose of this essay is not to evaluate the rural credit

policy of the United Progressive Alliance government. Nevertheless, it is clear that if any
government is seriously to address the crisis in rural banking, it must reaffirm the
commitment of the state to the policy of social and development banking, and reaffirm the
part played by the credit system in redistribution and poverty alleviation. Commercial banks,
Regional Rural Banks and cooperatives must lead rural credit revival, which is too serious
and large-scale a task to be left merely to self help groups or NGO-controlled private-sector
micro-credit organisations. The geographical and functional reach of public sector banking
must be restored and extended, differential interest policies reinstated, and special loans-cum-
subsidy schemes reintroduced on a large scale for all landless and poor and middle peasant
households, scheduled caste and tribe households and other vulnerable sections of the rural
population. Priority sector norms must be enforced, and, instead of an alternative such as
investment in RIDF bonds, penalties must be imposed on any failure of banks to meet these
public-interest targets.

If financial liberalization had the effect of damaging

the system of formal credit severely, our case studies show that changes in national banking
policy have had a rapid, drastic and potentially disastrous effect on the debt portfolios of the
income-poor. In general, as formal sector credit withdrew, the informal sector rushed in to
occupy the space that it had vacated. Although it is clear that chronic indebtedness among the
rural poor is a problem that cannot be solved by banking policy alone, and that the abolition

30
of usury requires agrarian reform, a decisive change in banking policy is essential for the very
survival of the working people in rural India.

Regional Rural Banks

Regional Rural Banks, as we have noted, were created in the
1970s exclusively to serve the credit needs of rural India, and specifically those individuals,
social groups and regions most excluded by the formal system of credit. For all their
weaknesses, these banks passed an important international test. A cross-country study of rural
credit institutions threw up the important finding that, in the period 1988-1992, of all the
institutions studied, Regional Rural Banks in India incurred the lowest costs of
administration, 8.1 per cent of the total portfolio.

An important feature of banking reforms has

been to alter the equation between different sectors of banking, in this case, to make the
norms governing Regional Rural Banks indistinguishable from those governing commercial
banks, thus undermining their capacity to serve the special needs of the rural economy and
the rural poor

There has been a ban on recruitment to the staff of

Regional Rural Banks since 1992 (Jagan Mohan, 2004). At every discussion or seminar on
problems of rural credit that we have attended in the recent past, bank officials speak of the
impact on rural credit of the greying of bank personnel and the thinning of their ranks. Field
officers of Regional Rural Banks in the 1970s and 1980s were relatively young and capable
of spending substantial periods of time in the villages served by their branches. Regional
Rural Banks have also suffered because they are no longer permitted to recruit agricultural
science and engineering graduates for specialised lending (see Shetty, 2004 and Jagan
Mohan, 2004). Liberalization has had the effect of crippling Regional Rural Banks, rendering
them incapable of fulfilling their original mandate.

31
Marketing of Rural banking in India

32
MAJOR RURAL BANKING
PLAYERS IN INDIA

33
 MAJOR RURAL BANKING PLAYERS IN INDIA
REGIONAL RURAL BANKS

The Narasimham committee on rural credit recommended the establishment of Regional

Rural Banks (RRBs) on the ground that they would be much better suited than the
commercial banks or co-operative banks in meeting the needs of rural areas. Accepting the
recommendations of the Narasimham committee, the government passed the Regional Rural
Banks Act, 1976. A significant development in the field of banking during 1976 was the
establishment of 19 Regional Rural Banks (RRBs) under the Regional Rural Banks Act‚1976.

The RRBs were established “with a view to developing the rural economy by providing, for
the purpose of development of agriculture, trade, commerce, industry and other productive
activities in the rural areas, credit and other facilities, particularly to small and marginal
farmers, agricultural labourers, artisans and small entrepreneurs, and for matters connected
therewith and incidental thereto” .

 Objective
 Functions
 Regional Rural Banks in India
 Regional Rural Banks in Tamil Nadu

RRBs established with the explicit objective of

 Bridging the credit gap in rural areas

 Check the outflow of rural deposits to urban areas
 Reduce regional imbalances and increase rural employment generation

The main objectives of setting up the RRB are to provide credit and other facilities‚
especially to the small and marginal farmers‚ agricultural labourers artisans and small
entrepreneurs in rural areas.

Each RRB will operate within the local limits specified by notification.

34
If necessary‚ a RRB will also establish branches or agencies at places notified by the
Government.

Each RRB is sponsored by a public sector bank‚ which provides assistance in several ways‚
viz., subscription to its share capital‚ provision of such managerial and financial assistance as
may be mutually agreed upon and help the recruitment and training of personnel during the
initial period of its functioning.

Functions

Every RRB is authorized to carry on to transact the business of banking as defined in the
Banking Regulation Act and may also engage in other business specified in Section 6 (1) of
the said Act. In particular‚ a RRB is required to undertake the business of

(a) granting loans and advances to small and marginal farmers and agricultural laborers‚
whether individually or in groups, and to cooperative societies‚ including agricultural
marketing societies‚ agricultural processing societies‚ cooperative farming societies‚ primary
agricultural credit societies or farmers‟ service societies‚ primary agricultural purposes or
agricultural operations or other related purposes, and

(b) Granting loans and advances to artisans‚ small entrepreneurs and persons of small means
engaged in trade‚ commerce‚ industry or other productive activities‚ within its area of
operation.

The Reserve Bank of India has brought RRB‟s under the ambit of priority sector lending on
par with the commercial banks. They have to ensure that forty percent of their advances are
accounted for the priority sector. Within the 40% priority target, 25% should go to weaker
section or 10% of their total advances to go to weaker section.

35
OBJECTIVE OF THE
STUDY

36
 OBJECTIVE OF THE STUDY
1. To study marketing of rural banking in India.

2. To study comparative marketing of rural and urban banking in India.

3. To study about Institutional sources consist of the co-operative and commercial banks

including Regional Rural Banks (RRBS)

4. To study about Non institutional or private sources including money lender traders

commission agents and landlords

37
 RESEARCH
METHODOLOGY

38
 RESEARCH METHODOLOGY
Research in common parlance refers to a search for knowledge. The advanced learner‟s
dictionary of current English lays down the meaning of research as “a careful investigation of
enquiry especially through search for new facts in any branch of knowledge.”
The systematic approach concerning generalization and the formulation of a theory is also
research. The purpose of research is to discover answers to questions through the application
of scientific procedures.

“A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.”
- JOHN.W.BEST
Research may be defined as “any organized inquiry designed and carried out to provide
information for solving a problem”.
- EMORY
“Research is essentially an investigation, a recording and an analysis of evidence for the
purpose of gaining knowledge”.
- ROBERT ROSS

DESCRIPTIVE RESEARCH DESIGN

Descriptive research design studies are those studies, which are concerned with describing
the character of a group.
The researcher makes a plan of the study his research work. That will enable the researcher to
save and resources such a plan of study or blue print or study is called a research design.
Three main purposes of research are to describe, explain, and validate findings. Description
emerges following creative exploration, and serves to organize the findings in order to fit
them with explanations, and then test or validate those explanations
The reason to adopt the descriptive research is due to the type of research question, design,
and data analysis that will be applied to a given topic. Descriptive statistics tell what is, while
inferential statistics try to determine cause and effect. Descriptive research aims at fact
finding & more often is based on surveys .It‟s purpose to describe the present state of affairs
of the topic of study. It is more focused than an exploratory study. It provides basic
information for formulating more sophisticated study.

39
DATA COLLECTION
The study was based on questionnaire method. There are two types of data collection:
 Primary data
 Secondary data

Primary data
The primary data are those, which are collected a fresh and for the first time happen to
be original in character. It has been collected through a Questionnaire and personal interview.
Only the primary data is not the sufficient to get information about the complete topic so both
primary and secondary data is collected.

Secondary data
Secondary data are those which have already been collected by someone else and
which have already been passed through the stratified process. It has collected through the
books, journals & Internet.

RESEARCH INSTRUMENT
Questionnaire
“A questionnaire is simply a set of questions designed to generate the data necessary for
accomplishing a research project’s objectives” (Parasuraman, 1991, p.363).

SAMPLE DESIGN:
POPULATION
 It covers the 100 unit of population.

SAMPLE PROCEDURES
In this study convenient sampling method was adopted. First each
organization was divided into different departments like Operations, Customer
Services, Human Resources, Internet Marketing and under writing

40
 departments. From this department, the respondents were selected on the basis
of convenience.

INTERVEIW SCHEDULE

 The interview schedule has been used to collect the data. Information can be
gathered even when the respondents happen to be literate or illiterate.

TABULATION

 It is the arrangement of classified data in an orderly manner. This involves

creating table for recording the filled in interview schedule. These tables are of
immense help to analysis by using the statistics tools help to analysis by using
the statistical tools.

TOOLS USED FOR ANALYSIS

Simple percentage analysis
 It is simple analysis tool. In this method, based on the opinions of the
respondents, percentage and bar chart is calculated for the respective scales of
each factor.

Formula:
Simple percentage = No of Respondents x 100
Total No of Sample Size

LIMITATIONS OF THE STUDY

 The study is focused only in Bajaj Allianz Life Insurance Company.
 Thus the respondents are not come forward to provide their feedback regarding their
organization than the result is bias.
 In this study the sample size is 70. The result might vary when the sample size values
changes it.

41
 Researcher fined the difficulty in searching the appropriate advisor and respondent
throughout the city.
 The research was limited to the Lucknow city.

42
 DATA ANALYSIS

AND INTERPRETATION

43
 DATA ANALYSIS AND INTERPRETATION

1) Central Scheme to provide Interest Subsidy for the period of moratorium on loans
taken by farmer from economically weaker sections from schedule banks under the
loan scheme of the Indian Banks Association?

□ To great extent

□ To some extent

□ To very little extent

Table: 1:- % of the respondent

Rural Bank Urban Bank

To great extent 64 0

To some extent 26 72

To very little extent 10 28

total 100 100%

80 72
64
70
60
50
40 28
26
30
20 10
10 0
0
To great extent To some extent To very little extent

Rural Bank Urban Bank

44
Interpretation:

From the above data it is evident that among the respondent,

 44% of the respondent of rural bank says that Central Scheme to provide Interest
Subsidy for the period of moratorium on loans taken by farmer from economically
weaker sections from schedule banks under the loan scheme of the Indian Banks
Association to great extend where as none of the respondent of Urban Bank says that
Central Scheme to provide Interest Subsidy for the period of moratorium on loans
taken by farmer from economically weaker sections from schedule banks under the
loan scheme of the Indian Banks Association to great extend.

 26% of the respondent of rural bank says that Central Scheme to provide Interest
Subsidy for the period of moratorium on loans taken by farmer from economically
weaker sections from schedule banks under the loan scheme of the Indian Banks
Association to great extend where as 72% of the respondent of Urban Bank says that
Central Scheme to provide Interest Subsidy for the period of moratorium on loans
taken by farmer from economically weaker sections from schedule banks under the
loan scheme of the Indian Banks Association to some extend.

 10% of the respondent of rural bank says that Central Scheme to provide Interest
Subsidy for the period of moratorium on loans taken by farmer from economically
weaker sections from schedule banks under the loan scheme of the Indian Banks
Association to great extend to very little great extend where as 28% of the respondent
of Urban Bank says that Central Scheme to provide Interest Subsidy for the period of
moratorium on loans taken by farmer from economically weaker sections from
schedule banks under the loan scheme of the Indian Banks Association to very little
extend.

45
2) To what extent is Sales Promotions have been used by banker to increase sales in the short
term?

□ Completely

□ Partially

□ Nil

Table: 02% of the respondent

Rural Bank Urban Bank

Completely 90 59

Partially 10 30

Nil 0 11

total 100 100%

90
100

80 59
60
30
40
10 11
20 0
0
Completely Partially Nill

Rural Bank Urban Bank

46
Interpretation:

From the above data it is evident that among the respondent,

 90% of the respondent of Rural Bank says that Sales Promotions have been used by
banker to increase sales in the short term where as 59% of the respondent of Urban
Bank says that Sales Promotions have been used by banker to increase sales in the
short term.

 10% of the respondent of rural bank says that Sales Promotions have been used by
banker to increase sales in the short term where as 30% of the respondent of Urban
Bank says that Sales Promotions have been used by banker to increase sales in the
short term.

 No respondent of rural bank says that Sales Promotions have been used by banker to
increase sales in the short term is nill where as 11% of the respondent of Urban Bank
says that Sales Promotions have been used by banker to increase sales in the short
term is nill.

47
3) Does your marketing policy of bank have a focus marketing on agro- sector?

□ Strongly agree

□ Agree

□ Disagree

□ Strongly disagree

□ Can‟t say

Table: 3% of the respondent

Rural Bank Urban Bank

Strongly Agree 83 61

Agree 17 23

Disagree 0 16

strongly disagree 0 0

Can't say 0 0

total 100 100%

90 83
80
70 61
60
50
40
30 23
17 16
20
10 0 0 0 0 0
0
Strongly Agree Agree Disagree strongly Can't say
disagree

Rural Bank Urban Bank

Interpretation:

From the above data it is evident that among the respondent,

48
 83% of the respondent of Rural Bank strongly agree that Marketing policy of bank
have a focus marketing on agro- sector where as 61% of the respondent of Urban
Bank also strongly agrees that Marketing policy of bank have a focus marketing on
agro- sector.

 17% of the respondent of Rural Bank agree that Marketing policy of bank have a
focus marketing on agro- sector where as 23% of the respondent of Urban Bank also
agrees that Marketing policy of bank have a focus marketing on agro- sector.

 None of the respondent of Rural Bank disagree that Marketing policy of bank have a
focus marketing on agro- sector where as 16% of the respondent of Urban Bank also
disagree that Marketing policy of bank have a focus marketing on agro- sector.

 None of the respondent of Rural Bank & Urban Bank also strongly disagree that
Marketing policy of bank have a focus marketing on agro- sector.

 None of the respondent of Rural Bank & Urban Bank can‟t says that Marketing
policy of bank have a focus marketing on agro- sector.

49
4) Multiple „basic‟ financial services and loan gateway is product marketing of the bank?

□ Yes □ No

Table: 4:-% of the respondent

Rural Bank Urban Bank

Yes 87 62

No 13 38

total 100 100%

87
100
80 62

60 38
40 13
20
0
Yes No

Rural Bank Urban Bank

Interpretation:

From the above data it is evident that among the respondent,

 87% of the respondent of Rural Bank says that Multiple „ basic‟ financial services
and loan gateway is product marketing of the bank where as 62% of the respondent of
Urban Bank also says that Multiple „ basic‟ financial services and loan gateway is
product marketing of the bank.

 13% of the respondent of Rural Bank sasys that Multiple „ basic‟ financial services
and loan gateway is product marketing of the bank where as 38% of the respondent of
Urban Bank also says that Multiple „ basic‟ financial services and loan gateway is
product marketing of the bank.

50
5) Devised to ensure usage as well as profitability Quantity discounts, and ease in payment
modes is pricing marketing of the bank.

□ Yes □ No

Table: 5:-% of the respondent

Rural Bank Urban Bank

Yes 11 13

No 89 87

total 100 100%

89 87
100
80
60
40 11 13
20
0
Yes No

Rural Bank Urban Bank

Interpretation:

From the above data it is evident that among the respondent,

 11% of the respondent of rural bank says that Devised to ensure usage as well as
profitability Quantity discounts, and ease in payment modes is pricing marketing of
the bank. whereas 13% of the respondent of Urban Bank also says that Devised to
ensure usage as well as profitability Quantity discounts, and ease in payment modes is
pricing marketing of the bank..

 89% of the respondent of rural bank says that Devised to ensure usage as well as
profitability Quantity discounts, and ease in payment modes is pricing marketing of
the bank. whereas 87% of the respondent of Urban Bank also says that Devised to
ensure usage as well as profitability Quantity discounts, and ease in payment modes is
pricing marketing of the bank..

51
6) Comprehensive offering of different services is placement marketing of the bank?

□ Traditional □ Modern

Table: 6:-% of the respondent

Rural Bank Urban Bank

Traditional 98 91

modern 2 9

total 100 100%

98
91
100
80
60
40
9
20 2

0
Traditional modern

Rural Bank Urban Bank

Interpretation:

From the above data it is evident that among the respondent,

 98% of the respondent of rural bank says that Comprehensive offering of different
services is placement marketing of the bank where as 91% of the respondent of
Urban Bank says that Comprehensive offering of different services is placement
marketing of the bank.

 2 % of the respondent of rural bank says that Comprehensive offering of different

services is placement marketing of the bank where as 9% of the respondent of Urban
Bank says that Comprehensive offering of different services is placement marketing
of the bank.

7) Collaborating with NGO‟s to development Knowledge marketing of the bank

□ Yes □ No
52
Table: 7:-% of the respondent

Rural Bank Urban Bank

Yes 33 81

No 67 19

total 100 100%

81
90
80 67
70
60
50 33
40
30 19
20
10
0
Rural Bank Urban Bank

Yes No

Interpretation:

From the above data it is evident that among the respondent,

 33% of the respondent of RURAL BANK says that Collaborating with NGO‟s to
development Knowledge marketing of the bank where as 81% of the respondent of
Urban Bank also says that Collaborating with NGO‟s to development Knowledge
marketing of the bank.

 67% of the respondent of RURAL BANK says that Collaborating with NGO‟s to
development Knowledge marketing of the bankwhere as 19% of the respondent of
Urban Bank says Collaborating with NGO‟s to development Knowledge marketing of
the bank.

53
CONCLUSION

54
 CONCLUSION

RRBs' performance in respect of some important indicators was certainly better than that of
commercial banks or even cooperatives. RRBs have also performed better in terms of
providing loans to small and retail traders and petty non-farm rural activities. In recent years,
they have taken a leading role in financing Self-Help Groups (SHGs) and other micro-credit
institutions and linking such groups with the formal credit sector.

RRBs should really be strengthened and provided with more resources with which they can
undertake more of these important activities. And most certainly they should be kept apart
from a profit-oriented corporate motivation that would reduce their capacity to provide much
needed financial services to the rural areas, including to agriculture. Ideally, the best use of
the resources raised by RRBs through deposits would be through extensive cross-
subsidisation. This, in turn, really requires an apex body that would cover and oversee all the
RRBs, something like a National Rural Bank of India (NRBI).

The number of rural branches should be increased rather than reduced; they should be
encouraged to develop more sophisticated methods of credit delivery to meet the changing
needs of farming; and most of all, there should be greater coordination between district
planning authorities, Panchayati raj institutions and the banks operating in rural areas. Only
then will the RRBs fulfill the promise that is so essential for rural development.

55
 REFERENCE

Books:

 Aaker (1991) Building Strong Brands; New York: Free Press

 Chatterjee, Jauchius, Kaas and Satpathy no. 1, (2002): 'Revving up auto branding', McKinsey
Quarterly.
 David. A. Aaker, V.Kumar & George S. Day, (2001) Descriptive Research: Marketing
Research, Seventh Edition, pp 17
 Saxena, Rajan. (2003):‟Marketing Management‟ Tata Mcgraw-Hill Publishing
Company Limited. New Delhi
 Sontakki, C.N. (1997):‟Marketing Management‟ Kayali Publisher., New

 Kotler, Philip. (1999):‟Marketing Management‟ Prentice Hall Of India Pvt. Ltd., New Delhi.
 Kothari, C.R (2001):‟Research Methodology‟, Vishwa Publication., New Delhi
 Sharma,D.D(2002):‟Marketing Research‟,Sultan Chand Sons, New Delhi

Magazines:
 Business Today
 Business Week.
 Business World

Newspapers
 Economic Times
 The Hindu
 Times of India

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