Rural banking has spread less than what the RBI would like to believe, and cannot be improved unless the bank leaves dogma behind and faces reality
..... Rural banking can be made profitable, but it requires a different business model: low-cost local staff close to villagers, and continuous effort to make banks useful. The public sector model is quite inappropriate for rural banking. That is why it has progressed so slowly in India and, more importantly, why it has been reported to be more successful than it actually is. The RBI wakes up every few years, exhibits a few statistics, and likes everyone to believe that banks are penetrating villages. The first thing it needs to do is honest, objective surveys into the real state of financial transactions in rural areas. And rural banking will wake up only when the RBI allows new forms of enterprise into it.
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After three and half years after the study report on cost and benefit analysis and usage of no frill accounts in cuddalore district authored by me, the findings are relevant even today and found interesting for a mainstream financial journal to refer for the article on financial inclusion. S. Thyagarajan, DGM, RBI.
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