RURAL BANKING AND MICRO FINANCE

1.RURAL DEVELOPMENT ,RURAL BANKING AND RFIS, MICRO FINANCE

(1)RURAL DEVELOPMENT: Rural Development in general is used to denote the actions and initiatives taken to improve the Standard of living in non-urban neighbour hoods Countryside and remote villages. Rural development is primarily concerned with addressing the needs of the rural poor in the matters of sustainable economic activity.

(2)RURAL BANKING: 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 whenever 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. (3)RFIS: Rural Financial Institutions are Co-operatives, Public-Sector Banks, Regional Rural Banks, Micro Finance Institutions, Private Sector Commercial Banks. Agricultural Development Banks, Mutualist Financial Institutions, Financial NGOs (4)MICRO FINANCE: Micro finance provides small loans to the World s poorest communities .Provision of

financial services to low-income clients or solidarity lending groups including consumers and the self-employed financial services to low-income individuals or to those who do not have access to typical banking services.

2.PRIORITY SECTOR CREDIT,AGRICULTURAL CREDIT

(5)PRIORITY SECTOR CREDIT: The RBI has instructed the scheduled Commercial banks that their total advances to the priority sector should be at least 40% of their net bank credit. It has also specified lending to minimum sub-targets for Agriculture 18%;for weaker sections of the society 10% and for Differential Rate of Interest 1% of bank s net bank credit.

(6)AGRICULTURAL CREDIT: Any of the several credit vehicles used to finance Agricultural transactions ,including loans, notes , Bills of exchange and banker s acceptances . These types of financing are adapted to the Specific financial needs of farmers, which are determined by planting ,harvesting and marketing cycle. Short- term credit finances ,operating Expenses, intermediate term-credit is used for farm Machinery, and long-term credit is used for real-estate Financing.

3.ALLIED AGRICULTURAL ACTIVITIES AND ITS FINANCING

(7)ALLIED AGRICULTURAL ACTIVITIES: These are also called Special farming such as poultry farming ,Dairy farming, Piggery, Pisciculture (culture relating to fishes),Sericulture(Culture relating to Silkworms),apiary(The science of bee-keeping) etc.

(8)FINANCING OF ALLIED AGRICULTURAL ACTIVITIES: Agri Gold Loan, Short/Medium/Long-Term

(9)SHORT-TERM CREDIT: A crop loan is a short term loan given to the farmer to enable him to raise crops ;the bank s finance will cover all expenses right from preparatory cultivation down to marketing inclusive of cost of inputs. The duration of crop loan is dependant on the gestation period of the crop; and it is repayable as soon as the crop is harvested and marketed(within a reasonable time , Say two months after harvest). Pursuant to the announcement made in the Union Budget 2006-07 the RBI has instructed all public sector Banks and Regional Rural Banks to ensure that short- term production credit upto Rs.3 lac should be made available to farmers at an interest rate of 7%p.a. The short term structure is a three tier structure with Primary Agricultural Credit Societies in rural areas , Co-operative Central Banks at the District level and the Apex Bank at the state level.

4.SHORT-TERM/MEDIUM TERM/LONG TERM CREDIT WITH REFERENCE TO AGRICULTURAL SECTOR

(10)MEDIUM TERM CREDIT: Medium term credit means where repayment term is 7 years or less. (11)Long Term Credit: Farm Machinery ,Irrigation, Land purchase, Equipment, Construction, Expansion of building, Purchase of farms, live stock, Tree Crop plantations, Leasing ,Venture Capital ,Boats, Mariculture, Land Development

5.REGIONAL RURAL BANKS

(12)REGIONAL RURAL BANKS: The Government of India set up Regional Rural Banks(RRBs) on october 2,1975.The Banks Provide credit to the Weaker sections of the rural areas. As on 1.1.2010 there were 84 RRBs. RRBS were established under the provisions of an ordinance promulgated on the 26.9.1975 and the RRB Act,1976 with an objective to ensure

Sufficient institutional credit for agriculture and other rural sectors. The RRBs mobilize financial resources from rural/semi-urban areas and grant loans and advances mostly to Small and Marginal farmers, Agricultural Labourers and Rural artisans. RRBs are jointly owned by Government Of India, the Concerned State Government and sponsor Banks(27 Scheduled Commercial Banks and one State Co-operative Bank);the issued capital of RRB is shared by the owners in the proportion of 50%,15% and 35% respectively.

6.KISAN CREDIT CARD,ARTISAN CREDIT CARD, SWAROJGAR CREDIT CARD

(13)KISAN CREDIT CARD: The Scheme aims at providing need based and timely credit support to the farmers for their cultivation needs as well as non-farm activities. Model Scheme of kisan Credit Card formulated by NABARD in 1998-99 is being Implemented in all the states and Union Territories. All the kisan credit card holders would be insured for Rs.50,000 at a nominal premium of Rs.per annum. Revolving cash credit facility allowing any number of drawals

and repayments within the limit. Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit. Limit to be fixed on the basis of operational land holding ,cropping pattern and scales of finance. Seasonal sub-limits may be fixed at the discretion of banks. The limit is valid for 3years Subject to annual review by issuing branch /PACs or

designated branches. (14)ARTISAN CREDIT CARD: This has been introduced by Bank of India, Dena Bank, Indian overseas Bank & Allahabad Bank. The purpose is to provide adequate and timely assistance to artisans to meet their credit requirements both investment needs as well as working capital. Investment loan for purchase of

Tools/equipments by way of Demand loan/Term Loan with appropriate repayment schedule .The Scheme would be applicable both in rural and urban areas. Eligibility: 1.All existing artisan borrowers of the bank enjoying credit limits up to Rs.2 lakhs and having Satisfactory dealings with the bank.

2.All artisans involved in production/ manufacturing process. 3.Preference would be given to artisans registered with Development commissioners (Handicrafts). 4.Thrust in financing on cluster of artisans and artisans who have joined to form Self-help Groups(SHGS).

5.Beneficiaries of other Government Sponsored Schemes are not eligible . Maximum limit: Rs.2lakhs per borrower. Margin: Up to Rs.25,000 Nil Above Rs.25,000 20 to 25% Validity: 3 Years (15)SWAROJGAR CREDIT CARD: National Bank for Agriculture and Rural Development, Syndicate Bank,Oriental Bank of Commerce(OBC) have introduced this scheme.OBC has this scheme as Credit Guarantee Fund trust for Micro and Small enterprises.

Validity:5 Years Almora Kshetriya Gramin Bank has this scheme for Composite Loan to small artisans/micro entrepreneurs. Eligibility: small artisans/handloom weavers/ Small entrepreneurs. Amount of Loan: Composite loan Maximum Rs.25,000/Repayment: 5 years Margin :NIL

7.LEAD BANK SCHEME

(16)LEAD BANK SCHEME: Lead Bank Scheme was introduced in 1969 based on the recommendations of Prof.D.R.Gadgil study group. It is the adoption of Area approach for targeted and focused banking. Lead Bank acts as consortium leader ,initiates& takes proctive steps for allotment of Districts, District consultative committees, District

Credit Plan, Village adoption Scheme etc. Objectives of Lead Bank Scheme: 1.Eradication of unemployment and under employment 2.Appreciable rise in the standard of living for the poorest of the poor 3.Provision of some of the basic needs of the people who belong to poor sections of the society.

8.SERVICE AREA APPROACH-PLP/DCP

(17)SERVICE AREA APPROACH-PLP/DCP