International Journal of Engineering and Management Research (IJEMR)

In India, rural people in general and women in particular are largely illiterate, unaware and lack of courage to borrow from formal credit institutions to meet their socio economic needs. In addition to that urban based financial institutions, staff apathy and lack of work experience in the rural sector has restricted the formal flow of credit to the rural poor. Another need of rural people is for consumption credit to meet urgent religious, social, educational and medical needs for which the banks do not normally give loans for such purposes. A World Bank study reveals that 65 percent of credit needs of poor people in India are for consumption needs and such needs are met by informal sources at interest rate ranging from 30 percent to 70 percent per annum. In rural areas the sections largely comprising of marginal farmers, landless labourers, self employed, urban slum dwellers, migrants, ethnic minorities and socially excluded groups and in order to bring them into financial inclusion, various institutions like commercial banks, regional rural banks and co-operative banks were built at the national, state, District and Village levels to act as a channel for savings and credit for investments. Despite that 60 percent of the rural household does not have deposit accounts, nearly 80 percent of the rural households have no access to credit from a formal source, 70 percent of marginal farmers do not have a bank account, 52 percent of the farmer households are financially excluded from both formal and informal source and overall 73 percent of farmers have no access to formal source of credit. The issue of prevailing financial exclusion has become a matter of concern in recent times to Government, Bankers, Regulators and Researchers. Keeping in view, an attempt has been made to understand the Savings Pattern of Rural Households in the select clusters of Kanchipuram Districts.