India’s rural consumption market is projected to reach $600 billion by 2020, a major increase from its current level of $190 billion. Speaking at the “Banking towards strengthening rural India: New paradigms and directions” conference at Mangalore University in Karnataka, B. R. Bhat, Managing Director of Corporation Bank said that increasing income levels and the need for financial inclusion, offers commercial banks and lenders to tap into a massive low-income market. Mr. Bhat encouraged banks to use mobile services to reach rural and remote populations.
Increasing income levels and shifting consumption pattern in rural areas is expected to provide a plethora of opportunities to lenders and industries, according to Mr B.R. Bhat, General Manager, Corporation Bank.
Delivering the keynote address at a national conference on ‘Banking towards strengthening rural India: New paradigms and directions,’ organised by the Association of Mangalore University College Teachers at Subrahmanya in Dakshina Kannada district, he said rural India represents a large and fast-growing market for many goods and services. The rural consumption market is likely to reach $ 600 billion by 2020, from the current level of $ 190 billion, he said.
Out of the six lakh habitations in the country, only about 30,000 habitations have a commercial bank branch.
Mr Bhat said integration between rural and urban areas has increased with the increase in mobility. Despite this, progress is very uneven in different parts of the country.
Stating that it is difficult for the banks to expand in all areas of rural India because of various infrastructure problems, he said they should tap the reach of mobile services to provide value-added services.
On challenges of providing credit in rural areas, he said the supply of formal credit to rural areas is inadequate. Added to this, credit market in rural areas is imperfect and fragmented. With this, the distribution of formal sector credit in rural areas has been unequal.