Credit divide: Gaps exist in rural finance access despite progress

According to the Reserve Bank of India's Annual Report for 2024-25, there has been a significant increase in the number of banking outlets in rural areas over the past decade

The latest Rural Sentiment Survey (of September), of the National Bank for Agriculture and Rural Development, captures, among other things, both progress and persistent fault lines in rural finance. On the positive side, 54.5 per cent of the households surveyed now borrow exclusively from formal sources, the highest since the survey began last year. However, nearly 22 per cent of them remain dependent solely on informal credit. This segment continues to face high costs: Average interest rates are at 17-18 per cent, with one-third of the borrowers paying more than 20 per cent annually. About 24 per cent