NABARD And RBI Take Big Steps To Improve Financial Awareness In Villages
NABARD And RBI Take Big Steps To Improve Financial Awareness In Villages
The National Bank for Agriculture and Rural Development (NABARD) and the Reserve Bank of India (RBI) are working together to make sure people in rural areas, especially small borrowers, know more about banking and finance.
Financial Literacy Camps in Villages
NABARD is supporting Financial and Digital Literacy Camps through rural bank branches and Financial Literacy Centres (FLCs). These camps happen in the less bank literate and government scheme aware geographical areas.
Villagers are educated at these camps about:
- Their ability to open a bank account
- The possibilities of using digital and mobile banking
- Government and related pension and insurance schemes
- Safety from online frauds
2,421 Financial Literacy Centres Established
Since 2017, the RBI has initiated Centres for Financial Literacy (CFLs). These centres are run in local communities using simple and interactive methods. As of March 31, 2025, 2,421 CFLs are running across the country—each one covering around three blocks.
Village-Level Programmes for SHGs
NABARD also supports Village Level Programmes (VLPs) in partnership with banks and State Rural Livelihood Missions. These programs help Self-Help Groups (SHGs) to:
- Open group bank accounts
- Get bank loans easily
- Understand how to repay loans on time
Easier Microfinance Loans
To help small borrowers, RBI has made microfinance loans simpler and more flexible:
- Now, all loans without security to households earning up to ₹3 lakh per year are treated as microfinance loans.
- Restrictions like loan limits and fixed repayment terms have been removed.
- Earlier, 50% of the loan had to be for business use. Now loans can also be used for medical, education, or personal needs.
Borrower Protection Measures
To protect borrowers:
- RBI has set a rule that people should not spend more than 50% of their monthly income on loan repayments.
- Lenders must follow strict recovery guidelines—no pressure or harassment is allowed.
- Every lender must have a system to handle complaints related to loan recovery.
Fair Interest Rates on Loans
Earlier, RBI had fixed maximum interest rates on loans. Now, banks and finance companies decide their own interest rates, but they must:
- Get board approval
- Be fair and reasonable
- Explain all charges clearly to the borrower
Self-Regulatory Bodies Watching the Sector
Two organizations—Sa-Dhan and Microfinance Industry Network (MFIN)—keep an eye on microfinance companies. They ensure:
- Borrowers do not take too many loans from different lenders
- Total debt of borrowers stays within safe limits
- Microfinance rules are followed strictly
Monitoring of Borrowers’ Credit
All loan and income details of borrowers are now shared with Credit Information Companies (CICs). This helps lenders check how many loans a person has already taken and stops people from borrowing more than they can repay.
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