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RURAL FINANCE

RURAL FINANCE. NABARD. Rural Finance . Encompasses the range of financial services offered and used in rural areas by people of all income levels.

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RURAL FINANCE

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  1. RURAL FINANCE NABARD

  2. Rural Finance • Encompasses the range of financial services offered and used in rural areas by people of all income levels. • Rural finance comprises credit, savings and insurance (or insurance substitutes) in rural areas, whether provided through formal or informal mechanisms. The word 'credit' tends to be associated with enterprise development, whereas rural finance also includes savings and insurance mechanisms used by the poor to protect and stabilize their families and livelihoods (not just their businesses). • An understanding of rural finance helps explain the livelihood strategies and priorities of the rural poor. Rural finance is important to the poor.

  3. Elements Of Rural Finance Financial Secr • Agricultural finance : Dedicated to financial agricultural related activities such as input supply,production,distribution,wholesale, processing and marketing . • Micro Finance – financial services for poor and low income people by offering smaller loans and savings services Financial Sector Rural Finance Agricultural Finance Micro Finance

  4. USE OF LOAN BY%OF HHS

  5. Categorization : • Depending upon the requirement and purpose, the funds needed by the Indian farmers can be categorized into three types: • Short term loans - 12 to 15 months • Medium term loan – 3 to 5 years • Long term loans – 15 to 20 years

  6. Sources of Rural finance • The two credit sources available to the farmers are institutional and Non-institutional. • Institutional sources consist of the co-operatives and commercial banks including Regional Rural Banks (RRBS). • Non-Institutional or private sources include money lenders, traders, commission agents and landlords.

  7. SOURCES OF DEBT (%)

  8. Non- Institutional Sources • Non-Professional Mahajans –rich farmers and landlords – as a side business • Professional Mahajans – money lenders who indulge in as their full time professions. • For recovery of loans force farmers to sell. • 15% of rural credit provided.

  9. Institutional Sources • Cooperative credit • Regional rural banks • Commercial Banks • State Bank & Agricultural credit • NABARD • Service Area Approach • Local Area Banks • Agricultural and Rural Debt Relief Scheme 1990 • Kisan Credit Card scheme.

  10. FARMERS RELIANCE ON THE BANKING SECTOR

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