Rural Banking by XYZ Bank

Abstract

Viability of rural financial institutions especially the nationalized commercial banks, is a top of debate among academicians and practitioners. With the fulfillment of prudential norms, most of the banks have incurred losses and their rural banking operations have been heavily criticized. The central bank has also promoted some remedial policy measures, like closure of loss-making branches and increases in lending rates to improve margins. But based on empirical evidence counter arguments of reaping full scale economies and thereby improving the efficiency of operations have been advocated by some authors. This case provides information on exploring both options through use of multivariate model of profitability of rural banking.