The Regional Rural Banks (RRBs) have been growing their importance since inception, in 1975 as special institutions playing a catalyst role in the development of rural areas they have been playing a significant role in financing the weaker sections of the community in the rural areas & also in inculcating banking habits among rural masses. RRBs being a new species in the multi- agency credit delivery system of India. particularly at the grass root level it is worthwhile to study their contribution to the economic development of India. The paper aims at analyzing the present role & identifying the future role of the RRBs in the rural development of India in the light of the case study of Gramin bank of Aligarh regarding Poverty Alleviation Programme viz. Swarnjayanti Gram Swarojgar Yojna.
In India we have multi agency rural credit delivery structure comprising commercial banks. regional rural banks & co-operative banks with a large network of more than 153,000 retail credit outlets (one for every 4100 population). Yet reaching the poorest, whose credit requirements are very small, frequent & unpredictable. is still a difficult task and “Sahukars’ continues to be the main agency. Further the systems and lengthy procedures of the banking institution with emphasis on complicated qualifying requirements, tangible collateral margin etc. also kept them away from these formal agencies. Banks too experience certain problems like poor repayment, lack of supervision and monitoring high proportion of nonperforming assets. Since the credit ,”requirements of the rural poor cannot be adopted on project lending approach (like in informal 9 organized sector) there emerged the need for an informal credit supply through self help groups.
Social intermediation is required for organizing weaker sections of the rural society imparting training and skills and educating them.
The government has taken several initiatives to strengthen the institutional rural credit system. The branch network of commercial bank has expanded. The commercial banks are required to ensure that 40% of total credit is provided to the priority sector out of which 18% in the form of direct finance to agriculture & 25% in priority sector in favor of weaker section.
This paper is based on the study of regional rural banks that how they are working for the upliftment of weaker section rural society. There are 70 RRBs in the area of study. We have taken Dhanipur and Lodha block for the study from where we have collected the data of 8 village namely. Nagla Jhaoo. Asana Ajitpur. Nijamat pur, Bolna Asatpurkayam, Dhanipur, Gurusikiran, Meerpur, and Bhudhanasi.
This analysis shows the virtual and real impact of the Poverty alleviation programme before and after financial assistance availed. The assessment is on the basis of:
1. Income We have computed the average income of the 132 beneficiaries monthly and yearly to know the impact on income. We have taken the income of the Below Poverty Line (BPL), before and after borrowing the loan. If the difference between these two is Zero, it means. bank loan has no impact on the income of the BPL, i.e. impact is constant. If the difference between these two is in negative form, it means people are in loss and the bank’s loans have the negative effect. i.e. it will create loss to the borrowers as well as to the banks. But if the difference between them is positive, it indicates the increase in the income of the BPL, i.e. it is generating a new income and it will be profitable to the BPL and to the bank’s.
A study of data of 132 family households reveals that BPL category persons are getting employment in agriculture for 165 days to 180 days in a year. In petty trade they get employment for 340 days and on other activities such as lock making/weaving they get employment for 300 days. Hence, it may be assumed that they remain under employed for many days in a year. which results in low income and low standard of living. They remain idle in rainy season when economic activities in rural areas remain in low profile.
The Analysis of data of 132 family households makes it clear that these households are engaged in various activities such as. daring, lock-making, weaving, trading. and working as a casual labour in the farm fields of big farmers in near by towns as unskilled labour.
Savings are very important for a person. Savings may be defined as the surplus amount which comes while deducting expenditure from the income of a person. Surplus savings may be invested for producing purposes to enhance the income of a person. If they are not invested and used for unproductive purposes then no increase in income occurred. Savings are also used for emergency needs of a person in short term and long term. A study of 132 family households reveals that BPL category persons have no savings habits. As there is a big gap between the income and expenditure to fulfill their daily needs. They used up most of the income earned by them. Even to meet out the consumption needs they borrow money from mahajan. relatives, land lords etc. who charges high rates of interest on these borrowings. Most of the (95%) beneficiaries are under debt. They pay up to 36% to 60% rate of interest.
Conclusion and suggestions:
1. Regional Rural Banks are not being able to provide the desired outcome as of non performing assets play a negative role and steps should be taken to remove them.
2. Economic viability should be integral part of the organizational setup.
3. Multi agency rural credit delivery structure must be protected and supported by the Government(s).
4. Competent authorities / bodies should be incorporated to float the desired knowledge / awareness about banking among the rural society which could help in increasing the assets base of RRBs through deposits.
5. Required supports should be provided by NABARD to RRBs, pertaining to micro financing.
This article has extracted from the research on Role of Regional Rural Banks in Poverty Alleviation conducted by Dr. Neeraja Sharma. She is an Associate Professor at Accurate Institute of Management and Technology which is one of the best PGDM College in Greater Noida.