Will Finance Minister’s proposals be a boon to rural India?

For Rekha Rajendra Yadav, a daily wage farm labourer in Koregaon village in Maharastra’s Satara district, this year’s Budget holds a lot of promise. The 30-year-old, who had recently opened a savings account with Fino Payments Bank, will now be able to deposit more into her account, thanks to the measures taken by the government to boost the rural economy.

The Finance Minister, in his speech while addressing the issues in the rural sector, has taken measures to help distressed farmers, boost consumption and financial inclusion aimed at improving growth, jobs and private investment.

For villagers such as Rekha, more money with her means more savings. “I try to save about ₹1,000-1,500 in my bank every month out of my monthly earnings of ₹5,000. If the government works on creating more jobs in rural areas, then we would be able to save more for our future,” Rekha told BusinessLine.

Another woman, Chhaya Karat, works for about 10-12 hours a day to earn about ₹300. She wants to buy a smartphone but hasn’t been able to save enough. With the boost in rural economy, hopefully, Karat can go for a loan from a bank, which is ready to lend at her door-step.

Not many banks focus on providing small personal and structured loans to rural customers, but a boost in economy will improve the lending book of the banks, especially the new-age ones, say experts.

However, the measures by the government, if implemented properly, would not only help in improving the income levels in rural India but also boost rural banking.

The banking sector has hailed Arun Jaitely’s Budget saying that it will create a need for people to open more bank accounts and boost transactions.

Rishi Gupta, MD & CEO, Fino Payments Bank, said: “For new-age banks like payments banks, these developments augur well as improvement in income levels is expected to drive more people towards using banking services and investing in relevant financial products.” Ittira Davis, COO, Ujjivan Small Finance Bank, said that the bank already has a large focus in the rural area with the use of technology, and the government’s will to improve internet connectivity in rural areas would just be an extra boon. Ravi B Goyal, Chairman & Managing Director, AGS Transact Technologies Limited, said that the focus on digital infrastructure will also help financial services. “As anticipated, digitisation is the foremost agenda this year as well. These initiatives will definitely enable the booming FinTech and Banking Payments Services industry to further enhance this growth.”

GST woes

There were also some dampener, as the banking sector was hoping for a reduction in GST slab on banking services and duties on micro-ATM devices, which could further benefit the banking and financial services ecosystem. Besides, the new-age banks were also expecting 3-5 years of tax holiday specifically for the rural branches, which could have encouraged banks to expand their operations.