In the rural economic setup, the source of living and work is different, and a banking system must be there that can translate those demands and create a service that will help the local producers and farmers of that part. Thus, a bank or an NBFC can cater to the needs of the people who stay in that economy.
One of the big parts is being played by the small finance and the co-operative banks, which hold the deposits of these people and help them by providing the right lending facilities at a fair price which helps the farmers to sustain themselves.
In this blog, we will examine rural development and the role of financial institutions in facilitating economic development in that area.
- The Role in Financial Inclusion
When we consider the fact that a person can get better access to banking facilities, it means now a farmer or a village teacher can visit a local bank and can keep their money and, in some cases, invest so that their savings can grow.
They, too can take the help the growth in the country. Here, the bank can also start its DSA network through the DSA app, and the agents can include various citizens into the paradigm of the bank through different financial products.
When banks and NBFCs open branches in different parts of the country, they invite the people of that region to invest a certain amount in the bank, which increases the value of their savings. This empowers individuals to take control of their finances, and these people can also participate in the formal sectors of the economy.
- Helps the individuals to Get Access to Credit
The next service the banks provide to the villagers or the people of the rural economy is smart access to credit, which can reduce their dependence on loan sharks. Without this access to capital, people in the rural economy can’t start any entrepreneurial activities.
Here, a person can now go to a bank can get credit at a formal rate, which is going on in the country, and these are the companies or banks that are now explaining to different individuals why choosing a bank is better than taking informal loans. Here, the interest payment rate is nominal, and one can return the amount for a long term setting by choosing an EMI option which eases the interest payment tenure of the individual.
- Helps the Farmers to Do Agricultural Financing
Farmers’ role is to do agriculture, and for that, they need a certain amount of capital each year to set the field. This will help those farmers make some positive impact on their yield as they don’t need to take loans at a higher interest rate.
In formal sector lending, like banks and NBFCs, there is some support from the government where there can be a stay order in the loan collection process if the agricultural year goes bad or dry.
At that time, these farmers can get relaxation when it comes to the use of credit from the formal sectors. By supporting the agricultural activities in the rural economy, the banks create a sector where people can go to farming and find a profit incentive from it.
- Helps in Empowering Rural Entrepreneurs
Another essential aspect of the rural economy is the encouragement of entrepreneurship and how that can help the economy to benefit by creating jobs in the tertiary sector of the rural economy.
The banks and the NBFCs, with the help of the personal loan DSA, are now bringing loan products in front of those entrepreneurs who want to start something new in their place. Many talented individuals are there in the rural economy. Still, they can’t start because they don’t have access to capital, and that becomes a major hindrance in their work or setting up of a business.
- Adds Technology and Digital Data Point For Better Tracking
Finally, it’s the role of technology that is spearheading the growth even in the rural economy. Banking with the help of technology, even in the rural economy, facilitates growth and helps to complete transactions in a fast and secure way with a trail of proof.
All these aspects add to how banks and NBFCs can bring new changes in the rural economy and bring growth in the sector.
