Abstract

The Indian banking sector is facing pressures similar to any company – ensure profitability and to provide adequate returns to the shareholders. With cutthroat competition and reduced margins in the urban sector, banks are looking to diversify their portfolios and creating services to tap the rural markets. With the renewed focus of the Reserve Bank of India and the Ministry of Finance for providing microcredit to the rural sector along with the growing competition in terms of reach and financial spread, banks and financial institutions have necessarily had to foray into the rural market. here are 135 million rural households in India with a per capita income of INR 8,000. Statistics show that rural households have no savings. A World Bank study assessing access to financial institutions found that amongst rural households in Andhra Pradesh and Uttar Pradesh, 59 percent lack access to deposit account and 78 percent lack access to credit. Considering that the majority of the 360 million poor households (urban and rural) lack access to formal financial services, the numbers of customers to be reached, and the variety and quantum of services to be provided are really large. It is estimated that 90 million farm holdings, 30 million non-agricultural enterprises and 50 million landless households in India collectively need approx U.S.$30 billion credit annually, approximately 5 percent of India's GDP. This paper attempts to explore what are the major special protest in rural baking and what measures should be taken by bank for sustainable development in rural banking.

Keywords: Rural banking, Technology, Credit system, ATM, Indian Bank.