Banking in rural India

You live in rural India, you trade produce for cash, cash for living – so why the government push for you to open a bank account, and what do you need it for?

Approximately 68 percent of India's population live in 580,779 villages, with nearly 104,000 of these having a population of 200 or less. To complicate this diversity, 325 different languages are spoken with 1,652 dialects.

Overnight on 24 November 2016, Prime Minister Narendra Modi demonetised larger Rs500 and Rs1000 notes, requiring older notes in circulation to be banked in order to claim their value. At that time, the majority of India's rural population did not hold a bank account.

According to a Price Waterhouse Coopers report, this numbered approximately 233 million at the time. The opening of bank accounts took off but, despite this, half the population of India are still to open a bank account.

Problem – how do you participate in banking when there are no branches in your village?

Answer – you bring the branch to the village.

With financial inclusion for the rural population comes the ability to save, the availability of financial advice, insurance, and best of all – affordable credit.

Financial literacy is further advanced with approval for women's self-help groups where banks assist them to be self-sufficient within their own communities, pooling funds and lending within the group, and over time building their net worth and bank credit rating.

India has 126,623 bank branches, the highest number of branches according to IMF. There are approximately 40,000 bank branches in rural India, with 12,124 ATMs.

There are 20 Nationalised banks (government banks), 88 scheduled commercial banks, 28 public sector banks, 35 private banks, and 31 rural banks. Incentivising banking services to rural India is an ongoing challenge, but one which is worth the effort.

The bank that manages to increase the Indian banking market, will capture significant market share in the process.