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Rural Banking in India: A “Core Solution” Perspective

Rural Banking in India: A “Core Solution” Perspective

Abstract
The agencies for the disbursement of rural credit in India have been brought under the legislative scanner with a view to improving their standards of efficiency and governance. Chief recommendations include the need for tighter and more transparent executive and financial control, one of the means of achieving which is an uniform accounting system. A planned HCL initiative aims at contributing to this nation-wide tranformation through the design and implementation of a cost-effective and mission-focused core rural banking solution. This paper describes the functional and technology aspects of the proposed solution, which is sensitive and responsive not only to regulatory mandates, but also to the ground realities of rural banking operations in India.

Excerpts from the Paper
A rural bank, while essentially a vehicle of financial inclusion, exists solely to service the specific financial needs of a people that survive on farming and animal husbandry in Indian villages. In a social sense, a rural bank enters the daily lives of its customers and becomes a partner in their well-being and distress. It may add on services in response to shifts in demographic patterns - for example, facilitating payments to and from farmers' family members studying and working in cities.

It may take extensive recourse to technology to cut costs, to extend outreach and to improve processes -  mobile banking, bank-ina-kiosk, biometric ATMs and smartcards all being good examples. But, its objectives, business lines and style are always defined by the peculiar financing requirements of farmers, by crop cycles, by the vagaries of weather and by seasonal events like festivals. The traditional banking system, the systems and procedures of which are actually designed for the urban industrial and business financing, has limitations in reaching out to the last mile. That is the gap that the rural banking system addresses.

 

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