Indian economy is the world’s second fastest growing economy. The banking sector of the country is so well organized that even the world crisis could not effect it.
There are very few villages in the country that have banks. Most of the rural population in India is still not able to enjoy the benefits of banking.
So, the Government of India introduced financial Inclusion Plan, in order to bring financial literacy amongst the masses. The Reserve Bank of India has asked the banks to extend their services to every village above the population of 2,000. According to the top official of a private sector bank, most of the banks have already started working in this direction.
But the banks working in this direction are facing some difficulties in their mission of financial inclusion. The literacy rate amongst the people in rural India is very low. With low availability of banks in the villages people have to go for more expensive options.
As the literacy rate in the villages is low, it makes very difficult for the intermediaries to make the population aware of the financial services of the bank. It is rather not very profitable deal for the banks too, as they do not find sufficient business volumes.
As most of the villages in India still lacks in basic infrastructure, the banks find it very difficult and expensive to provide their services to the rural population.
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