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Taking a trip down the academic lane and shuffling the sheets of those textbooks, which read aloud, “India is primarily an agricultural country.” The statistics show that more than 60% of the Indian population resides in rural areas. Also, statistically, agriculture employs 45.6% of the Indian workforce, contributing 18.29% to GVA. The numbers above show that a big chunk of the population depends on rural India for their livelihood, making it an integral part of the economic domain. All of the facts make the discourse on the financial development of rural India excessively important.
Small-scale enterprises, women-run start-ups, and other such initiatives in rural areas usually do not get backed by sufficient finance or resources that can equip them to thrive. The small transactions and the remote location prevent financial institutions from investing in the area since they deem it high risk and not so high returns.
Financial institutions, especially microfinance, can help reduce this funding disparity to a great extent.
Financial institutions should offer micro-loans to the people of rural areas who don’t have the collateral to get large-scale loans. These smaller loans, with time, can grow into significant investments that would allow them to avail of conventional bank loans. Micro savings is another provision for entrepreneurs with low investment to grow and thrive subsequently. Since these savings accounts do not require any average minimum balance, there’s no pressure to maintain the same. The saved money can be pooled into their business, helping it stay stable and prosperous.
Women entrepreneurs lead several MSME industries. Funding such enterprises or equipping them with sufficient financing can pave the opportunity for these women to expand and diversify their businesses. Such initiatives also create employment opportunities, so as they prosper, they will open doors for more employment openings. Thus, overall increasing the economic structure of the area.
Extending banking services to untouched areas with such facilities can bring significant development, providing people of the place with stable economic footing.
The GoI, private and public financial institutions have created initiatives to open zero balance accounts and provide educational, start-up and other loans with minimal or no collateral. Expanding the sector’s reach to even the remotest area can improve the conditions of the rural poor.
Many SHGs can use the help of these banking services to boost their businesses and the area’s development.
Non-Banking Financial Companies and Microfinance Institutions are a great source of lending micro-level loans to help people engineer wheels to the dreams they have been harbouring for so long. It also funds small-scale enterprises. Due to the provision of enabling minimum documentation in times of urgency or during expanding the business, the funding process tends to be faster.
Home loans are another significant aspect that allows many rural dreams of building a “house of our own” to come to life with bricks and stones.
Financial institutions can potentially turn around the developmental fate of any area. By putting in place the foundations of banking services, it can also accelerate the infrastructural growth of that area. With the infrastructure in order, industrial and technological advancements aren’t miles away. Financial inclusions of rural areas pull out the vulnerable section of society from trenches of further poverty and deprivation by opening rooms of opportunities for them. Reducing rural poverty would increase the community’s growth, ultimately escalating the rise of the national economy and development.
The non-discriminatory expansion of financial institutions to multiple areas of agrarian civilization is essential for uplifting the nation as a whole, for a considerable amount of the population holds a rural background. Empowering women, providing education from early stages, promoting small-scale industries, etc., all form a part of the eradication process of rural poverty. “Wars of nations are fought to change maps. But wars of poverty are fought to map change.” The aforesaid words of Md. Ali stands true to the core. Making people aware and vigilant about governmental schemes and financial advancements should be the initial step towards the road. With awareness under execution, change is not a far cry. Follow Jaldee Business blogs for regular insights into the world of finance, healthcare, and lifestyle.