Financial Inclusion and Performance of Rural Co-operative Banks in Gujarat

Abstract

In an Index of Financial Inclusion, India has been ranked 50 out of 100 countries. Only 34% of the India's population has access to basic banking services. The objective of the paper is to study financial inclusion in rural areas, reasons for low inclusion, satisfaction level of the rural people toward banking services and to assess the performance of the banks which are working in the rural areas which mainly include the co operative banks and regional rural banks. Structured questionnaire designed on the basis of literature review was used to collect data from 200 people residing in Ambasan, Jotana and Khadalpur villages of Gujarat. The paper first describes in detail the financial inclusion status in India and Gujarat followed with a review of scenario at the global level. The third section analyses the data with the help of Chi-square test and Tabulation followed with the discussion of analysis, recommendations and conclusion indicating that there is lot of opportunity for the commercial banks to explore the rural unbanked areas.  Though Regional Rural Banks (RRBs) and Primary Agriculture Credit Societies (PACS) have good coverage but most of them are running into losses. Commercial banks should seize this opportunity rather than looking at it as a social obligation.

Keywords: Financial inclusion, rural banking, Gujarat, rural cooperative banks