TOPIC

“A COMPARATIVE STUDY OF SELECTED RURAL

BANKING SCHEMES”
 INTRODUCTION TO TOPIC

 Introduction to Regional Rural Banks schemes in India:

The Government of India has been introducing several exclusive schemes for the
purpose of financial inclusion. These schemes intend to provide social security to
the less fortunate sections of the society. After a lot of planning and research by
several financial experts and policymakers, the government launched schemes
keeping financial inclusion in mind. These schemes have been launched over
different years. Let us take a list of the financial inclusion schemes in the country.
Rural banking institutions are playing a very important role for all-round
development of rural areas of the country. In order to support the rural banking
sector in recent years, Regional Rural Banks have been set up all over the country
with the objective of meeting the credit needs of the most under privileged
sections of the society.

These Regional Rural Banks (RRBs) have been receiving a high degree of
importance and attention in the rural credit system. Considering the gross absence
of banking facilities in the rural areas of the country, the Reserve Bank of India
in consultation with the Central Government, State Governments and some major
nationalized sponsored banks had set up some Regional Rural Banks in the late
1970s with a view to elevate the economic status of the rural poor as well as to
inculcate a habit of saving among the rural masses. As per the recommendations
of the Working Group on Rural Banks, the regional rural banks were established
in 1975 for supplementing the commercial banks and co-operatives in supplying
rural credit.

The main objective of regional rural banks in India is to advance credit and other
facilities, especially to small and marginal farmers, agricultural laborers, artisans
and small entrepreneurs in order to develop agriculture, trade, commerce,
industry and other usual productive activities in different rural areas of the
country.
 BANK PROFILE
Regional Rural Banks (RRBs) were established in 1975 under the provisions of
the Ordinance promulgated on the 26th September 1975 and followed by
Regional Rural Banks Act, 1976 with a view to develop the rural economy and
to create a supplementary channel to the 'Cooperative Credit Structure' with a
view to enlarge institutional credit for the rural and agriculture sector. The
Government of India, the concerned State Government and the bank, which had
sponsored the RRB contributed to the share capital of RRBs in the proportion of
50%, 15% and 35%, respectively. The area of operation of the RRBs is limited to
few notified districts in a State. The RRBs mobilise deposits primarily from
rural/semi-urban areas and provide loans and advances mostly to small and
marginal farmers, agricultural labourers, rural artisans and other segments of
priority sector.

The RBI in 2001 constituted a Committee under the Chairmanship of Dr Vyas on

“Flow of Credit to Agriculture and Related Activities from the Banking System”
which examined relevance of RRBs in the rural credit system and the alternatives
for making it viable. The consolidation process thus was initiated in the y ear
2005 as an off-shoot of Dr Vyas Committee Recommendations. First phase of
amalgamation was initiated Sponsor Bank-wise within a State in 2005 and the
second phase was across the Sponsor banks within a State in 2012. The process
was initiated with a view to provide better customer service by having better
infrastructure, computerization, experienced work force, common publicity and
marketing efforts etc. The amalgamated RRBs also benefit from larger area of
operation, enhanced credit exposure limits for high value and diverse banking
activities. As a result of amalgamation, number of the RRBs has been reduced
from 196 to 56 as on 31 March 201 5. The number of branches of RRBs increased
to 20,024 as on 31 March 2015 covering 644 districts throughout the country.
 INTRODUCTION TO RESEARCH

Why this topic?

RRBs plays a pivotal role in the economic development of the rural India. The
main goal of establishing regional rural banks in India was to provide credit to
the rural people who are not economically strong enough, especially the small
and marginal farmers, artisans, agricultural labours, and even small
entrepreneurs. This encourage me to study about the various schemes of rural
banking in India.
 OBJECTIVES OF THE PROJECT

 To analyze the selective Regional Rural Banks scheme in India.

 To understand the working of Regional Rural Banks scheme in India.

Literature review
A literature review is a text written by someone to consider the critical points of
current knowledge including substantive findings as well as theoretical and
methodological contributions to a particular topic .generally researcher conducts
and survey and related literature in order to review the present status of a
particular research topic .From survey of literature a researcher able to know the
areas which are not touched or yet to undertaken .the overview of literature at the
national or a international level to be researched reports articles books and other
material.

S. Suresha & H. R. Uma (2011) - Financial institutions have been established to

promote developmental activities in the country, and India is no exception to this.
And regional rural banks (RRBs) are one of its kind. The Main objectives of
RRBs are to mobilize financial resources for rural and semi-urban areas. Which
are relatively poor, particularly in recent years when the government is adopting
several development programs for the inclusive growth of poor rural people, the
role of RRBs highlighted as very significant. This work is an effort towards
evaluating the performance of such RRBs in Ramanagara district.

Dhaliwal N K (2010) - Regional Rural Banks were set up in 1975 with the basic
objective of providing credit facilities to the rural poor. In the light of changes
that have taken place in response to the financial sector reforms, the present study
appratises the growth and performance of Regional the growth and performance
of Regional Rural Banks in the state of Punjab. It attempts to intensively examine
and compare the various aspects of growth, profitability and productivity of
RRBs operating in the State and assesses the perception of customers regarding
working of these institutions. The study covers all the Regional Rural Banks
operating in Punjab, serving 15 districts of the State and having 210 branches.
The study is based on both primary data and secondary data.
Sharma Manohar (2010) concludes in his articles that most rural households
lack access to reliable and affordable finance for agriculture and other livelihood
activities. Many small farmers live in remote areas where retail banking is limited
and production risks are high. The recent financial crisis has made the provision
of credit even tighter and the need to explore innovative approaches to rural and
agricultural finance even more urgent.
Meenu Agrawal (2009) highlights that the Regional Rural Banks (RRBs) were
started in 1975 to cater to the needs of rural economy of India. They pay particular
attention to the credit requirements of small farmers, artisans and agricultural
workers. They operate mainly at the district level. RRBs have a special place in
the multi-agency approach adopted to provide agricultural and rural credit in
India. The capital of RRBs is contributed by the Central Government, concerned
State Government and a sponsor bank in the ratio 50:35:15. The papers examine
almost every aspect of the functioning of RRBs including geographical coverage,
clientele outreach, business volume and contribution to the development of the
rural economy.
 Hypothesis
 Null Hypothesis:-

The following null hypothesis is framed:

H0: There is no significant difference in selective of RRBs schemes in
India

 Alternative hypothesis:-

The alternative hypothesis is framed:

H1: There is significant difference in selective of RRBs scheme in India.

DATA ANALYSIS & INTERPRETATION

Data analysis is the process of systematically applying statistical &/or logical
techniques to describe & illustrate, condense & recap, & evaluate data. The data
analysis process provides a way of drawing inductive inferences from data &
distinguishing the signal from the statistical fluctuations present in the data.
 Method of Data Collection

 Primary sources includes:-

1) Discussion with branch managers of various bank.

2) Discussion with experts.
3) Discussion with people and customers of bank.

 Secondary sources includes:-

1) Various books related to financial inclusion.

2) Getting information from web site of various bank.
3) Web site were used as the vital information source ex. Rbi

RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the problems. It may be

understood to study how research is done scientifically. In this, we study various
steps that are generally adopted by the researcher in studying research problems
along with the logic behind them, to understand why we are using particular
method of technique so that the research results are capable of being evaluated. I
have used a lot of data to understand the concept of financial inclusion and to
study different type of financial inclusion. The data collected was interpreted and
then used as information in project.
 Limitations of the study
The present study is undertaken to maximize objectivity and minimize the errors.
However, there are certain limitations of the study which are to be taken into
consideration for the present work.
1. The study fully depends on financial data collected from the published
financial statements of Banks.

2. This study incorporates all the limitations that are inherent in the
financial statements.

3. Financial statements reflects the book value and the management

might have window dressed or manipulated the values.
 BIBLIOGRAPHY
Reference Books
1. Koontz and O’ Donnel, “Principles of Management - An Analysis of
Managerial Functions,” McGraw Hill Company, New Delhi; 1972, p.219.
2. Terry, G.R., “Principles of Management,” Richard D. Irvin inc., Illinois, 1977,
p.214.
3. Talwar R.K., ‘Some Issues in Rural Banking,’ The journal of Indian Institute
of Bankers, Vol.42(2), April-June, 1972, p.175.
4. Reddy C.R., “Rural Banking in India,” Rainbow Publications, Coimbatore;
1987, p.154.
5. International Co-operative Alliance, “State and Co-operative Development
Banks,” Bangalore; Allied Publishers, 1971, p.10.
6. Kumar, C.A., and Dakshina Murthy, D., ‘Mobilization of Savings - Role of
Commercial Banks, The Indian Journal of Commerce, Vol. 35(13), September
1982, p. 46.
7. Quddes Mohammed, “Control of Commercial Banks in India,” Sahitya
Bhavan, Agra, 1976, p.27.
8. Sharma, B.P., “The Role of Commercial Banks in India’s Developing
Economy,” Sultan Chand and Company Private Limited, New Delhi, 1974, p. 60.
9. Krishnaji, P. ‘Diversification of Banking Business - Ceaseless, Problems and
Prospectus,’ Pigmy Economic Review, Vol. 34(3), October 1988, p.l.
10. Reserve Bank of India, ACD. OPR, 2736, A-69, 1977-78, January 6, 1978.