Rural Finances
ONE of the common denominators of South Asian socio-economic situation is the
widespread poverty in rural areas. South Asian countries are nations of villages. The
majority of the population lives in rural areas. Since they constitute the bulk of the
national population, it is fair to say that the countries are in effect nations of rural
poor. Intense poverty marks living conditions in rural areas. A lot of thinking over the
decades has gone into ways to address rural poverty. It has been proven beyond doubt that
in order to uplift the rural masses out of poverty, infrastructural development alone will
not suffice. The ruralfolks must have at their disposal ways to engage in productive
exercises. For that, however, they need to have in their midst some kind of a willing
financer. The rural poor’s financing needs are hardly fulfilled by urban-based
banking system. They need the help of micro finance. Against the need for giving the rural
poor access to financing, many countries in the South Asian region, including Nepal, have
seen the growth of micro finance. Small savings and credit schemes have sprung up in many
rural areas, hugely benefiting a large number of the rural poor.
But on which sector should the rural micro finance schemes focus on? Bankers
and community workers from India, Sri Lanka, Bhutan and Nepal, participating at a seminar
on cooperatives and rural financing institutions the other day, emphasised that the
increasing productivity of agriculture should be a priority. Indeed, most of the South
Asian population is agrarian. It is logical that interventions contribute to improve the
agriculture sector and directly benefit the farmers. In fact, it is difficult to imagine
South Asia coming out of the poverty cycle unless farmers are specially targeted for micro
finance for a variety of reasons. Success stories of many farmers being able to increase
their agro-income from a small loan received from the local community savings and credit
scheme are aplenty. They have proven that all it takes is a little bit of financial pump
to pep up a farmer family’s fortunes and those of a community. In order to improve
the rural economy through micro finance, therefore, rural financing institutions and
cooperatives must be further strengthened and expanded.
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