Rural Banking Schemes in India

The Rural development is the foremost objective in India. It aimed at expanding the branch placement towards unbanked locations. The second major objective is to give importance to lending towards priority sectors.
The major target groups are agriculturists, small businessman and entrepreneurs. The Reserve Bank of India used its control over the banking sector via the lead bank scheme to ensure that these targets are adequately implemented.
The branch expansion program in unbanked rural or semi-urban population was not served by any commercial banks before. During the rural banking era, unbanked locations were identified by the 'Lead Bank'.The RBI would circulate the list of unbanked locations to all banks.
The RBI has also maintained a licensing criterion which stated how many branches at unbanked locations a bank must open in order to be eligible to open a branch at an already banked location.The RBI has also set targets regarding the number of unbanked locations, which were to be banked during the BBE program (Banking Branch Expansion) to meet these targets.Under this program, unbanked locations were allocated to nationalized banks.

Government Schemes

The priority sector lending concept is recognized as "Social Banking" with all its new dimensions.The major objective is to make sure that more credit flows towards agricultural, small transport operators, retail trade, cottage, village, tiny industries and small-scale industries. As, agriculture is the backbone of Indian economy.The government has sponsored many schemes in rural areas for upliftment and betterment of rural people under rural banking. As per all government schemes, finance is provided by government banks.

These schemes are as follows:

(a) Swaranjayanti Gram Swarozgar Yojana (SGRY)

The SGRY scheme was launched by the Government of India on 1st April 1999 by restructuring the six programmes-Integrated Rural Development Programme, Development of Women & Children in rural areas, Training for Rural Youth for Self employment, Supply of Improved Toolkits to Rural Artisans, Ganga Kalyan Yojana, Millions Wells Scheme.
By this scheme, it identified the eligible beneficiaries with the involvement of Gram/local authorities in a transparent manner.It lends to individuals or group (SHGs) and selecting beneficiaries from BPL families by a team of three members (Bankers, Development officer, Sarpanch). Individuals or groups below poverty line whose income does not exceed 11,500/- sponsored by DRDA reserve quota for SC/ST-50 %, Women-40% and Disabled 3%.
In the scheme, the provision for training like basic orientation and skill development is included.The subsidy will be at 30% of the project, subject to a maximum Rs7500/- In accordance with SC/ST it will be 50% of the cost of the project, subject to a ceiling of Rs 1.25 lakhs. There will be no monetary limit on subsidy for irrigation projects.

(b) Prime Minister Rozgar Yojana (PMRY)

The PMRY was implemented on 2nd October 1993 which aims at providing sustained employment to the educated unemployed youth.

Age: 18-35 years for all educated unemployed in general with 10 years relaxation for SC/STs, ex-servicemen, women and physically handicapped.
Educational Qualification: Minimum qualification for this scheme is 8th pass. Preference for those trained in government recognized/approved institution for a duration of at least 6 months.
Family Income: The family income should not exceed Rs.10000/- per annum.
Residence: Permanent resident of the area for at least 3 years.
Defaulter: Not be a defaulter of any nationalized bank/financial institutions/cooperative banks. Activity Covered: All economically viable activities including agricultural and allied activities excluding raising crop etc.
Project Cost: Rs 2 lakh for the business sector, Rs 5 lakh for other activities.
Reservation: In this scheme, preference will be given to weaker sections including women. The scheme includes 22.5% reservation for SC/ST and 27% for other backward classes OBC.

(c) Khadi and Village Industry Commission:

Its main aim is to create more employment opportunity in rural areas the Khadi Gram Udyog Commission has initiated a margin Money Bank Finance Plan since 1996-97.Its economic aim of helping in the manufacture of things that can be sold in the market.
The Margin Money Bank Plan is for setting up village industries and there is a provision of giving 25% to 30% of subsidy upon the sanctioning of the loan. The scheme provides for various cooperative committees like the individual, Khadi gramudyog for arranging loans from the bank's in an area with a population of 20000 and where per capita permanent capital investment is not more than 100000/-.
The aim of this scheme is to provide self-employment and subsidy to rural entrepreneurs. Under this scheme, the loan will be provided for rural industrialization and employment generation.

(d) Pradhan Mantri Jan Dhan Yojna (PMJDY)

It was launched on 28th August 2014. The scheme has been launched with a target to provide "Universal access to banking facilities". Under this scheme account holders will be provided zero balance bank A/c with Ru pay debit card in addition to accidental insurance cover of 1 lakh after 6 months of opening of bank a/c holders can avail Rs. 5000 overdraft from the bank.
A monitoring mechanism/MIS would be bought in place for online monitoring for ensuring proper coverage of villages.

(e) Bhamashah Yojna

It was launched on 15th August 2014 by CM of Rajasthan Vasundhara Raje. It aimed at the financial inclusion of women and also provide cash amount of Rs 2000 in the name of a woman head of every BPL family of the state in 2 instalments. Bank A/c are also being opened for about 1.5 crore families and the second instalment of Rs 1000 would be transferred in bank account 6 months after the first instalment. Conclusion:

It can be concluded that Rural Banking plays an important role in providing credit and other financial services to the poor. It helps in raising the standard of living of rural people and contributes towards social development.The government has taken many steps for the development of rural banking.In India, while one segment of the population has an access to an assortment of banking services surrounded by regular banking facilities and portfolio counselling.
In particular, a growth of information technology and its application in banking would warrant a thorough review of products, procedures and linkages among rural financial institutions.

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