Argument for
1. The Green Revolution has increased the agricultural production to a great extent and so the big farmers have to transact business which involves crores of rupees. This type of transaction can better be carried through banks.
2. The villagers in India are more orthodox and do not know that if they keep their money in the banks it will multiply their money and the nation will be able to utilize that money for the general benefit of the nation. Another benefit is saving habit of the villagers will be cultivated.
3. Indian farmers are poor and so they need financial help for buying seeds, fertilizer and even land. In villages money lenders put them to a lot of trouble and charge very high rate of interest. If the banks give loans to these farmers poverty from the villages can be eradicated.
ADVERTISEMENTS:
4. Rural banks can also adopt villages and take the responsibility of providing civic amenities, building modern houses and running schools in the villages. They can recover their expenses in installments at the harvesting time from the villagers. This will help the villagers to make quick progress.
Arguments against :
1. The experience of Co-operative Credit Societies has been that it is difficult to recover loan from the villagers. Their expenses outstrip their income and so they are unable to save anything. If loans are not recovered it will become difficult for the banks to carry on their business.
2. In the rural areas it will be easier for the criminals to loot money from banks. The banks will have to spend a huge amount of money for security arrangements. Even then they will not be able to have proper type of security.
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3. Rural banks will be greatly influenced by the local politicians with regard to the loan. In this manner the deserving people will not be able to get loans from the banks and the undeserving people will grab a major amount and the real purpose of these banks will be frustrated.