Vol. 2, Issue 3, Part I (2016)

Abstract

India lives in its villages and growth of Indian economy depends on the growth of the rural economy. The variation in rural income causes variations in the demand for products of the industrial as well as services sector. Economic development has become a major core competency. Along with social and environmental development, economic development of the rural communities has been pursued by most of us so as to seek, to create and support self-employment opportunities and encourage business activities by building capacity, lowering risks, identifying and enhancing opportunities, developing partnerships and facilitating market integration for farmers and villagers in our target areas. Thus, our interventions in the last years, ranged from raising awareness activities, technical and skill development training camps, identification of entrepreneurs and potential business areas, physical verification for credit granting, banking practices training to exposure visits and fair participation, technological guidance, marketing support and cluster development programs. 

The study of rural societies has drawn interest not only in development economics but also in many other disciplines. The panoramic view of developing economies is dominated by rural societies. Rural areas are often characterized by a paucity of viable financial institutions and lack of variety of financial services available. Rural communities often do not have access to saving options, credit services, insurance, or transaction services. Besides, limited access to long-term financing needed for agriculture, land improvement and other rural activities is also a hindering factor in the improvement of agric/rural sector. With these odd features, the rural sector presents a real challenge to the design of sustainable financial intermediaries. Since the emergence of financial inclusion as an effective tool for sustained economic growth, social stability and poverty reduction, it has become imperative to devise a result oriented rural finance strategy in developing economies. The present paper attempts to analyze critically all issues pertaining to service area approach with a view to draw meaningful inferences substantiated by relevant facts and figures. This analysis is related to how credit plans under service area approach are formulated, implemented and monitored at different levels. It also focuses on various conceptual and practical problems pertaining to formulation, implementation and monitoring of credit plans under service area approach.