There are hard numbers behind the enthusiasm of the banks and micro-finance institutions in tapping rural India. Farmers now account for almost 11% of the total deposits with banks, savings and current accounts included.
The data, released by Reserve Bank of India show the farming community has significant linkages with the banking sector. The numbers, almost Rs 2 lakh crore, show there is a strong need for the banking sector to develop varied products that appeal to farmers.
As of now, there are no deposit products with banks which are meant for farmers. Almost all the deposit schemes, run by the scheduled commercial banks are aimed at the salary and wage earners. This picture is ripe for change.
Deposits from farmers now rank closely behind that of salary and wage earners, as the accompanying table shows.
As on end 2008, the figure is just 23% lower.
The 36 million organised sector employees channel their income overwhelmingly through banks.
This is also because an overwhelming number of companies run salary accounts with banks, which makes it convenient
for employees to open their account there.
Says Professor Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research: ?Private sector banks have been setting up branches in rural areas and they have been able to mobilise deposits from farmers.?
The farming sector has no such compulsion. Even more, a large share of the transactions in the agricultural sector is often made through cash. Yet, the extent of their linkage with the banking sector shows this is a sector whose potential is yet to be explored.
The credit side of the farmer community has, of course, been flagged repeatedly. The government, for instance, is running a debt waiver scheme for small and marginal farmers, writing off over Rs 70,000 crore debt.