A

SYNOPSIS REPORT
ON
A STUDY ON RURAL BANKING IN INDIA
AT
ICICI BANK LIMITED
Submitted
By
M. SHEKAR
H.T.NO: 1325-20-672-160
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
RAMANTHAPUR
(Affiliated to Osmania University)
2020-2022
 Aurora’s PG College (MBA), Ramanthapur
Department of Management

SYNOPSIS

Title of the Project : A STUDY ON RURAL BANKING IN

INDIA

Student Name : M. SHEKAR

Hall Ticket Number : 1325-20-672-160

Signature of the Student :

Signature of the Guide :

 INDEX

. No. CONTENTS Page No

1 INTRODUCTION

2 NEED FOR THE STUDY

3 OBJECTIVES OF THE STUDY

4 SCOPE OF THE STUDY

5 RESEARCH METHODOLOGY

6 REVIEW OF LITERATURE

7 PROPOSED OUTCOMES

8 LIMITATIONS OF THE STUDY

9 CHAPTERISATION

BIBLIOGRAPHY
 INTRODUCTION
A rural bank can be defined as rural financial institution/ cooperative/ community bank or

deposit taking financial institution that providescustomised financial services to rural

communities. As a huge section of the country resides in rural areas, it is important from a

financial inclusion aspect that rural branches exist to cater to the population. However,

banking in the rural areas is different from merchant banking that exists in cities. This unit

will begin by examining the activities of a rural banker, underwriting, bankers to issue and

other services.

Rural banking refers to providing banking services to individuals living in rural areas. Rural

banking has become integral to the Indian financial markets with a majority of Indian

population still living in rural or semi-urban areas. Government of India and the Reserve

Bank of India have been continuously working to achieve complete financial inclusion i.e.

timely and sufficient access to financial services and credit at an affordable cost, in the vast

expanse of our country. Rural banking in India began in earnest with the formation of the

regional rural banks on October 2, 1975. Today, these rural banks are present in over 21,398

locations throughout the length and breadth of the country.

This book, Rural Banking, is divided into thirteen units that follow the self- instruction mode

with each unit beginning with an Introduction to the unit, followed by an outline of the

Objectives. The detailed content is then presented in a simple but structured manner

interspersed with Check Your Progress Questions to test the student’s understanding of the

topic. ASummaryalong with a list of Key Words and a set of Self-Assessment Questions and

Exercises is also provided at the end of each unit for recapitulation.

Rural banking is banking that is done in an area that is not close to towns or cities, making it

difficult for those who need to conduct banking business. Many times a bank agent will come

to the rural area to offer basic banking services. The goals of rural banks are to provide
 banking services to the rural/ village population of India. Rural banking is a common practice

in places where banking institutions are few and far between and people who need to carry

out banking transactions may have difficulty finding a way to do so. With modern

technology, more and more people have access to online systems that allow them to conduct

certain types of banking without a nearby branch but this technology is not available for

everyone and demand for rural banking is still high in some areas. Rural banking is the

process of conducting banking transactions out in the country where bank branches are too

far away to be of use. Rural banking is popular for very small towns and farmers who live far

away from areas of larger population and cannot make the drive to these locations even when

they need to use banking services. Typically an agent of the bank will visit these rural

locations and offer to make transactions in an official capacity.

The regional rural banks 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 faculties, particularly to small

and marginal farmers, agricultural labourers artisans and small entrepreneurs and for matters

connected therewith and incidental thereto. The institution of Regional Rural Banks (RRBs)

was created to meet the excess demand for institutional credit in the rural areas particularly

among the economically and socially marginalised sections. In order to provide access to

lowcost banking facilities to the poor, the Narsimham Working Group proposed the

establishment of a new set of banks, as institutions which combine the local feel and the

familiarity with rural problems which the cooperative possess and the degree of business

organisations ability to mobilize deposits, access to central money markets and modernized

outlook which the commercial banks have. The multi-agency approach to rural credit was

also to sub serve the needs of the inputintensive agricultural strategy, that is, the green

revolution, which by the mid- seventies was ready to spread more widely throughout the
 Indian countryside. In addition the potential and the need for diversification of economic

activities in the rural areas had begun to be recognized and this was a sector where the

Regular Rural Banks could play a meaningful role.

NEED FOR THE STUDY

Even if access to formal banking is provided to rural customers, there is no guarantee that

these services will be used. According to a study conducted by the World Bank, many

households, even in developed countries, choose not to have a bank account as they do not

engage in many financial transactions they collect wages in cash, spend in cash and do not

wish to be burdened by a bank account. To compound the situation many customers in rural

India, who have access toand would otherwise choose to use formal financial services, do not

do so because the product and service mixes do not meet their needs. The financial service

needs of rural customers are not confined to just savings and credit, as is usually assumed.

Their financial needs are linked toothier life cycle needs, ranging from savings to credit to

insurance to remittances. In fact, even the savings and credit products currently offered to

rural customers do not entirely meet their needs. Access to savings and investment facilities

is critical for the poor. The two critical needs for the rural poor are micro-savings and

frequent withdrawals. These needs facilitate a customer in building capital over the long

term, as well as coping with income shocks in the near term. However, banks do not offer

adequate services to address these needs. The lack of services, therefore, leaves the rural poor

with little option than to transact with the informal banking market. A study conducted by

Micro Save also concludes that the poor transact with the informal sector because it will

accept small amounts, provide doorstep service, and ensure ease of enrolment. Rural

customers need loans not only for productive purposes but alsofor consumption needs

(Following Table). A part from agricultural support, rural customers need micro credit for
 consumption, education and emergencies. Though banks offer purpose free loans(personal

loans and credit cards) in urban areas quite liberally, in rural areas sanction of such loans is

significantly restricted. Therefore, the poor raise these loans through the informal financial

system (it is worth noting that these loans taken from the informal system are almost always

repaid or renewed). In addition, larger households need occasional high value micro-

enterprise loans for small capital investment. Though banks offer these loans, they require

excessive documentation and time-consuming processes which discourage customer

applications.

SCOPE OF THE STUDY

 To make the analysis of rural banking in India through the following sources of

information

 Historical information about rural banking.

 Efforts by key stake holders.

 Partnership between banks and business correspondents.

 Banks products and services to meet rural needs.

OBJECTIVES OF THE STUDY

 To analyze the usage of bank facility by the rural customer

 To trace out the genesis and concepts of rural banking.

  To know the reasons for unprofitable of rural banking in India.

 To identify the cost per transaction of Indian Banks and purpose of borrowings.
RESEARCH METHODOLOGY

The study is both descriptive and analytical in nature. It is a blend of primary data and
secondary data. The primary data has been collected personally by approaching the online
share traders who are engaged in Rural Banking. The data are collected with a carefully
prepared questionnaire. The secondary data has been collected from the books, journals and
websites which deal with Rural Banking.

Source of data

Primary Sources: The primary data was collected through structured unbiased questionnaire
and personal interviews of investors. For this purpose questionnaire included were both open
ended & close ended & multiple-choice questions.

Secondary method: The secondary data collection method includes:

 Websites
 Journals
 Text books
Method Used For Analysis of Study
The methodology used for this purpose is Survey and Questionnaire Method. It is a time
consuming and expensive method and requires more administrative planning and supervision.
It is also subjective to interviewer bias or distortion.
Sample Size: 100 respondents
Sampling Unit: Businessmen, Government Servant, Retired Individuals

Statistical Tools: MS-excel and SPSS are used to analyze the data.
REVIEW OF LITERATURE

The advent of social associated improvement banking coverage entailed an intensive shift
from general labour in admiration of the aim and functioning of monetary business banks.
associate important perform of the coverage of social and improvement banking find your
self that it recast fully the performance of monetary business banks in rural banking.
beforehand of 1969, the dominion becomes presently not taken into perception to be the
matter of monetary business banks. five It becomes utterly at an equivalent time as 1969 that
a multi-institutional approach to credit score rating score provision withinside the dominion
became coverage, with enterprise banks, Regional Rural Banks, and cooperative institutions
turning into massive geographical and helpful come back via withinside the Indian kingdom.
The banking company of Asian u. s. (RBI) issued specific directives with admiration to
social and improvement banking. These coated swing needs for the enlargement of rural
branches, imposing ceilings on hobby fees, and swing recommendations for the sectoral
allocation of credit score rating scores. Rural credit score rating score becomes an associate
important issue of the 'inexperienced revolution' package; the first post-nationalization
locality of the boom in rural banking detected an implausible growth in credit score rating
score advances for agriculture. Specifically, a purpose of forty proportion of advances for the
"precedence sectors," particularly agriculture and allied activities, and small-scale and house
industries, find yourself set for enterprise banks. Advances to the dominion prolonged well,
despite the important reality that they require been, as finding yourself the revolution itself,
biased in admire of areas, plant life, and categories.6 The vital flowers that nurtural from the
revolution, as is with fulfilment recognized, location unit wheat and rice, and so the laptop
computer code of the extraordinary era find your self ordinarily withinside the irrigated
regions of the north- west and south of Asian u. s., with the benefits targeted several of the
richer categories of cultivators.
In 1975, the govt. started with the assistance of victimization ordinance at an equivalent time
as that legal pointers a shiny community of rural economic institutions observed because the
Regional Rural Banks (RRBs), that location unit promoted with the assistance of
victimization the govt.. of Bharat, State Governments, and enterprise banks. These location
units created at the idea of pointers with the assistance of employing operational
mercantilism on enterprise credit score rating score, except observed because the
Narasimham Committee and site unit speculated to "integrate the cooperatives' close to
expertise and familiarity with
the corporate acumen of monetary business banks" (JaganMohan, 2004, p 22).7 the number
of such banks extended swiftly and b 476 districts with the assistance of victimization 1987
The second component, that started withinside the due Seventies and early Nineteen Eighties,
find your self a length whereas the rhetoric of reform find your self later discarded with the
assistance of victimization of the ruling categories themselves, and a length whereas the
elemental gadgets of wonderful anti-poverty coverage location unit programs for the looks of
employment. one or two of ways for employment generation location unit envisaged,
particularly wage-employment via state-backed rural employment schemes and self-
employment generation via loans-cum-subsidy schemes targeted at the agricultural
dangerous. for this reason started a length of directed credit score rating score, at multiple
purposes of that credit score rating score find your self directed nearer to "the weaker
sections." the utmost vital new concern material of this component becomes, of direction, the
Integrated Rural Development Programme or IRDP, a subject rely upon the looks of most
inexperienced income-bearing belongings several of the negatives via the allocation of
backed credit score rating score. The IRDP find your self initiated in 1978-seventy 9 as a
run and prolonged to all or any or any rural blocks of the U.S.A. in 1980. there may be
supporter awful heap writing at the failure of IRDP to make a long-time amount of income-
bearing belongings withinside the palms of asset-awful rural households. eight Among the
many motives for this failure location unit the absence of rural reform and decentralized
institutions of democratic government, the inadequacy of public infrastructure and public
provisioning of guide services, and so the patience of employment lack of conviction and
impoverishment in rural society. even so, the IRDP approach did purpose associate outsized
switch of totally value vary to the agricultural dangerous.
2.2ARTICLES
ARTICLE: 1
TITLE: Commonplace General Overall Performance.
AUTHOR: Odisha. patriarch
YEAR: (2010)
ABSTRACT:
settled out whether or not or not or currently not or currently not or at the same time or at the
same time the consolidation of the RRBs has helped to spice up their commonplace general
overall performance, it concludes with a remedy that the general overall performance of the
RRBs has evolved as presently because of the merger.

ARTICLE: 2
TITLE: General Overall Performance Of RRBs.
AUTHOR: Ibrahim.
YEAR: (2013),
ABSTRACT:
for the duration of this gift paper, created a quickly create certificate ordeal to research and
fee the general overall performance of RRBs withinside the pre-and post- amalgamation
amount. Jindal, Sharma, and Shamim (2014) tried to research the altogether dangerous parts
that have a regarding the general overall performance of the RRBs.

ARTICLE: 3
TITLE: Rural Credit Score Rating Scores.
AUTHOR: Nathan, Hindu.
YEAR: (2002),
ABSTRACT:
According to legal pointers of the fashionable section of monetary relaxation have had a
correct away, direct, and dramatic ending on rural credit score rating scores. There has been a
contraction in rural banking modish and withinside the priority space disposition and
discriminatory disposition to the ugly notably.
ARTICLE: 4
TITLE: Tested the increase and close to the distribution of rural banking.
AUTHOR: Chavan and Pallavi.
YEAR: (2004)
ABSTRACT:
Tested the increase and close to the distribution of rural banking over the amount of 1975of -
2002. Chavan’s paper files the economic profit created via means of suggests that of the
historical unfortunate space of the east, northeast, and idolised an area of Asian USA at a
couple of purpose of the amount of social and improvement banking. These economic profit
profits reversed withinside the 1990s: cutbacks in rural branches in rural credit score rating
score deposits ratios are the steepest withinside the Japanese and northeastern states of Asian
USA. Policies of financial relaxation have remarkably worsened close to inequalities in rural
banking in Associate in Nursing Asian USA.

ARTICLE: 5
TITLE: Banking And Money Credit Score Rating Score.
AUTHOR: DilipKhankhoje and DrMilindSathye.
YEAR: (2008)
ABSTRACT:
Analyzed to certificates the version within side the general overall performance in phrases
of electricity rule general overall performance of RRBs in Asian coun nations to decide if the
general overall performance of these institutions has advanced post-restructuring in 1993-94.
The RRB changed into intentional in Sept 1975 to provide ok banking and money credit
score rating score concentres the agriculture space, small-scale and bungalow industries, and
fully specific rural sectors. These banks moon-confronted varied contests operational, and it
changed into ensuing from the failure in partaking in their targets. quick to revive those
banks from non-stop losses the govt. of Asian USA took the selection of consolidation with
their sponsored banks. It changed into predicted that those banks additionally|can also| |may
additionally |might also|may additionally} conjointly| furthermore |can also, additionally, |
what is more} moreover perform well, post-consolidation.
INDUSTRY PROFILE
A bank is a financial institution that accepts deposits and channels those deposits into lending
activities. Banks primarily provide financial services to customers while enriching investors.
Government restrictions on financial activities by banks vary over time and location. Banks
are important players in financial markets and offer services such as investment funds and
loans. In some countries such as Germany, banks have historically owned major stakes in
industrial corporations while in other countries such as the United States banks are prohibited
from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share
holding entity known as the keiretsu. In France, bancassurance is prevalent, as most banks
offer insurance services (and now real estate services) to their clients.

Introduction
India’s banking sector is constantly growing. Since the turn of the century, there has been a
noticeable upsurge in transactions through ATMs, and also internet and mobile banking.
Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in
2014, the landscape of the banking industry began to change. The bill allows the Reserve
Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a
bigger number of banks in the country. Some banks have already received licences from the
government, and the RBI's new norms will provide incentives to banks to spot bad loans and
take requisite action to keep rogue borrowers in check.
Over the next decade, the banking sector is projected to create up to two million new jobs,
driven by the efforts of the RBI and the Government of India to integrate financial services
into rural areas. Also, the traditional way of operations will slowly give way to modern
technology.
Market size
Total banking assets in India touched US$ 1.8 trillion in FY15 and are anticipated to cross
US$ 28.5 trillion in FY25.
Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over
FY08–15. Total deposits in FY15 were US$ 1,274.3 billion.
Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent (in terms of
INR) to reach US$ 2.4 trillion by 2019.
In FY18, private sector lenders witnessed discernable growth in credit cards and personal
loan businesses. ICICI Bank witnessed 181.6 per cent growth in personal loan disbursement
in FY18, as per a report by Emkay Global Financial Services. ICICI BANK's personal loan
business also rose 49.8 per cent and its credit card business expanded by 31.1 per cent.
Investments
Bengaluru-based software services exporter Mphasis Ltd has bagged a five-year contract
from Punjab National Bank (PNB) to set up the bank’s contact centres in Mangalore and
Noida (UP). Mphasis will provide support for all banking products and services, including
deposits operations, lending services, banking processes, internet banking, and account and
card-related services. The company will also offer services in multiple languages.
Microfinance companies have committed to setting up at least 30 million bank accounts
within a year through tie-ups with banks, as part of the Indian government’s financial
inclusion plan. The commitment was made at a meeting of representatives of 25 large
microfinance companies and banks and government representatives, which included financial
services secretary Mr GS Sandhu.
Export-Import Bank of India (Exim Bank) will increase its focus on supporting project
exports from India to South Asia, Africa and Latin America, as per Mr. Yaduvendra Mathur,
Chairman and MD, Exim Bank. The bank has moved up the value chain by supporting
project exports so that India earns foreign exchange. In 2014–15, Exim Bank lent support to
85 project export contracts worth Rs 24,255 crore (US$ 3.96 billion) secured by 47
companies in 23 countries.
COMPANY PROFILE
ICICI Bank is India's largest private sector bank with total assets of Rs. 5,946.42 billion (US$
99 billion) at March 31, 2019 and profit after tax Rs. 98.12 billion (US$ 1,637 million) for
the year ended March 31, 2019.ICICI Bank currently has a network of 3,839 Branches and
13,943 ATM's across India.

History
1955
The Industrial Credit and Investment Corporation of India Limited (ICICI)
incorporated at the initiative of the World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing to
Indian businesses. Mr.A.RamaswamiMudaliarelected as the first Chairman of ICICI
Limited.
ICICI emerges as the major source of foreign currency loans to Indian industry.
Besides funding from the World Bank and other multi-lateral agencies, ICICI was
also among the first Indian companies to raise funds from international markets.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering
in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of
Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by
ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at
the initiative of the World Bank, the Government of India and representatives of Indian
industry. The principal objective was to create a development financial institution for
providing medium-term and long-term project financing to Indian businesses.
 In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group offering a wide variety
of products and services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.
 
After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities,
and would create the optimal legal structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged entity's access
to low-cost deposits, greater opportunities for earning fee-based income and the ability to
participate in the payments system and provide transaction-banking services. The merger
would enhance value for ICICI Bank shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate relationships built up over five
decades, entry into new business segments, higher market share in various business segments,
particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries.
 In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's
financing and banking operations, both wholesale and retail, have been integrated in a single
entity.
PROPOSED OUTCOMES
RBI has directed that within the next five years the banking system must be extended to
India’s villages as part of financial inclusion. But a profitable business model for banking the
unbanked remains elusive. Since ensuring comprehensive physical presence with brick and
mortar branches is difficult, banks have to explore using modern information and
communication technologies and other means of outreach such as business correspondents
and the emerging 4G technologies to expand their reach in rural areas and promote financial
inclusion.
LIMITATIONS
1. Inadequate response from Customers in rural areas & employees of ICICI banks

at first interaction.

2. Inability of some of the rural people to understand the importance of our study.

3. The time constraint may be one of the major problems.

4. The lack of information sources for the analysis part.

5. Limited interaction with the concerned heads due to their busy schedule.8. The

findings of the study will be based on the information retrieved by the selected unit.
 CHAPTERISATION

CHAPTER -1 - INTRODUCTION

This chapter includes the introduction of the topic, need, scope, objectives of the study,

Project limitations and methodology of the study.

CHAPTER - 2 REVIEW OF LITERATURE

This chapter includes the theoretical background and articles written by different authors and

brief explanation of the topic.

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

This chapter includes the comparative analysis of the financial statements of the five years

data and it also includes the interpretation based on the study.

CHAPTER - 5 – SUMMARY AND CONCLUSION

This chapter includes the overall summary of the project and the conclusion based on the

study during the period.

 BIBLIOGRAPHY

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Descriptive Research: Marketing Research, Seventh Edition,
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 Saxena, Rajan. (2003): 'Marketing Management' Tata
Mcgraw-Hill Publishing Company Limited. New Delhi
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Delhi
MAGAZINES:
 Business Today
 Business Week.
 Business World
NEWSPAPERS
 Economic Times
 The Hindu
 Times of India
WEBSITES
https://en.wikipedia.org/wiki/Axis_Bank
https://tgbhyd.in/#/
https://branch.axisbank.com/location/
telangana/hyderabad