The current trends in the Growing Indian Rural Economy present a big business opportunity for Banks and help in achieving 100% Financial Inclusion
Question: The current trends in the Growing Indian Rural Economy present a big business opportunity for Banks and help in achieving 100% Financial Inclusion. Explain this:
India is a home to 700-million strong rural population. In recent years many factors such as microfinance products, exemption from income tax, NREGA, mass media penetration, investment in rural infrastructure and the increased production of higher-value crops, disposable incomes in rural households are increasing. These all factors add to a positive scope for business opportunity in rural India.
Apart from this the spending patterns of the rural consumers are now very much comparable to their urban counterparts. The rural middleclass is growing at a rate of approximately 12% against the urban class at 13%.
The growth of the rural markets further adds to this. Various sectors have grown in rural markets. The ever increasing mobile penetration, expanding telecom industry and growing rural FMCG markets lure the firms to now tap this great market. Media penetration has increased awareness among rural consumers. This has increased their willingness to spend, creating demand for modernized products in place of locally available items. The demand for premium brands has also risen in rural households.
Financial inclusion refers to making banking services at an affordable cost to disadvantaged and low-income groups in rural India. The basic concept of financial inclusion is not only having a saving or current account with any bank but also includes loans, insurance services and much more. Only 34% of Indian individuals have access to or receive banking services.
Recently RBI has taken innovative steps which include relaxing the Know Your Customer Norms and opening No frill accounts. The above mentioned development in Rural economy along with the RBI’s innovative steps will surely help to achieve 100% financial inclusion in India.