The role of financial inclusion is critical in rural areas through which the country gets the majority of its economic activities, as a large segment of the population is based in the rural areas of that place.
Financial inclusion is needed to facilitate access to cash among rural economy residents. Most farmers don’t have access to a savings account and cannot use banks’ products.
Here comes financial inclusion, which gives access to credit and increases the area’s livelihood. Here comes the DSA partner app, which helps a DSA work on several items, gain information about the area, and help the population with the right product for that region.
In this blog, we will look into the role of the NBFCs and how they are helping to form the financial landscape in rural India.
Challenges in the Rural Economy
When it comes to the rural economy, the first thing that comes to mind is the rural economy and how people get dependent on farming and make their livelihood by selling fodder items. It’s through the use of different types of rural economy metrics it can be found that the people of that region are hugely underserved and need to depend on loan sharks for credit services.
Here, we have mentioned some of the main challenges that are prevalent in the rural economy, and upon finding those one can delve for solutions for that economy.
- Minimum Access to Banking Institutions
In a rural economy, people don’t have large access to banking institutions. Here, the traditional banks often prefer to opt out as the net income earner of those regions was quite low, and hence comes the role of the NBFCs and their credit program, which can help the people in the rural economy.
Due to a lack of banking facilities, people can’t finance their home and other service, which dimishies the return of the credit. Hence, with the proper banking system, there is a lot of scope for the rural economy to grow and prosper continuously.
- Lower Financial Literacy
Another problem in the rural economy is the lower financial literacy and the lack of resources, which will raise awareness in that region. Due to this, many people in the rural economy can’t find other ways of making extra income and keep their money rather saved at some secret place or some low-interest-bearing account in a town, which diminishes the net amount as inflation starts eating into the savings.
In terms of awareness, people need to know the DSA full form, credit terms, and interest-occurring terms, which are relevant and useful for the financial well-being of that population.
- Lack of Infrastructure in the Rural Economy
A shortage of infrastructure doesn’t attract traditional banking institutions, and people in that area are severely underserved because the most useful financial tool is not available to them due to this issue.
Here, the NBFCs play their role and develop technology to cater to the clients’ need-specific issues, thus increasing the user base in those areas.
NBFCs Role in the Rural Economy
Here, NBFCs are doing their job to bring financial inclusion to that place, and through that, they can work towards the benefits of the rural economy which is there to progress better with the help of the right banking services.
- Helps to facilitate Credit in the Underserved Area
NBFCs take risks and serve those customers who were previously not served and are not the ones who are under the credit bureau score. Here, with the new access to funds at a lower rate, farmers and other small businesses can grow their work and expect to earn a return on their investment.
- Financial Products Catered Towards Rural Needs
The NBFCs are tailoring financial products such as crop loans, livestock loans, and other financing options like tractor financing, which helps the farmers to invest significantly and kickstart the rural economy with the help of technology and the right products.
Here, the companies are experts in providing micro-finance loans, and it can help the customers to access the funds freely.
These are some of the benefits that are brought by the NBFCs in the rural economy and help to kickstart economic activities in a faster and more modern manner.