Bridging the Gap: An In-depth Analysis of India's Rural Banking System and Its Role in Economic Development

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Neetu Chauhan Manu Chauhan

Abstract

The rural banking system in India plays a crucial role in promoting economic development and government initiatives, performance, emerging trends, and recommendations for improving the rural banking system.The paper highlights the significance of rural banking in addressing the socioeconomic disparities between urban and rural areas. It discusses the challenges faced by rural banks, including geographical constraints, financial illiteracy, risk aversion among borrowers, limited access to technology, and regulatory hurdles.


The paper also examines government initiatives aimed at promoting rural banking, such as the National Rural Livelihoods Mission (NRLM), PradhanMantri Jan DhanYojana (PMJDY), Mudra Yojana, and Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM). It analyzes the performance and impact of rural banking on credit disbursement, deposit mobilization, financial inclusion, and rural livelihoods.Emerging trends and opportunities in rural banking, including digital banking, agri-value chains, climate change, and women's empowerment, are also explored. The paper compares the Indian rural banking system with those of other countries, such as China and Bangladesh, to identify best practices and potential adaptations.


Finally, the paper provides recommendations for improving the rural banking system, including policy measures, strategies for banks and financial institutions, the role of technology and innovation, and the future outlook. By addressing the challenges and implementing these recommendations, the rural banking system in India can continue to play a vital role in promoting economic growth, reducing poverty, and improving the lives of millions of rural people.

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