ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Rural Banking Contrasts

To put what H B Shivamaggi ('Reforms in Rural Banking: Need for Bolder Approach', May 13) has stated about RRBs and their experience in rural lendings in a better perspective, let me share with your readers the actual experience of a branch of an RRB in an interior rural area of north Karnataka with that of a nationalised bank branch in the same area from a study conducted by the officials of the nationalised bank. For reasons of propriety, I shall not reveal the indentity of both the branches or the name of the area.

To put what H B Shivamaggi ('Reforms in Rural Banking: Need for Bolder Approach', May 13) has stated about RRBs and their experience in rural lendings in a better perspective, let me share with your readers the actual experience of a branch of an RRB in an interior rural area of north Karnataka with that of a nationalised bank branch in the same area from a study conducted by the officials of the nationalised bank. For reasons of propriety, I shall not reveal the indentity of both the branches or the name of the area.

The branch of the nationalised bank established as far back as 1977 has been in existence in the area for the past 23 years while the branch of the RRB opened for business only five years ago. The total business done by the branch of the nationalised bank came to a paltry Rs 4 crore despite its 23 years of existence. This was in sharp contrast to the experience of the RRB branch which could notch up a total business of Rs 6 crore in a short span of five years. The branch of the nationalised bank was set up exclusively for financing agriculture and related developmental activities. However of the total business of the branch, the amount given as loans was only Rs 1.30 crore, the balance was accounted for by deposits. Of the amount of Rs 1.30 crore, agriculture accounted for only Rs 0.70 crore, the rest being given to small traders and as personal loans. This, despite the fact that the area offered very good potential for lending to farmers for crop loans and agri-developmental activities. While we did not have the figures of total lendings of the RRB branch, we were told that a major part of the loans was for agriculture and related activities.

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