INTRODUCTION: (Md, Ibrahim kholilullah, AGRICULTURAL ECONOMICS ,2ND

BATCH ,SYLHET AGRICULTURAL UNIVERSITY ,01718996557)

Bangladesh is an agro-based country, essentially are endeavoring for rapid development of

the country. More or less 80 percent people directly or in directly depend on agriculture
for their occupation and live in villages .But it is a matter of great sorrow that farmers of
our country get less facility in agricultural inputs especially agricultural credit. Due to the
lack of credit at proper time they cannot produce crops at proper efficiency. So the
responsibility of rural banks needs to be increased. Because If current agricultural trends
continue, by the year 2020 in Bangladesh food shortage will increase many times, .The
lower calorie intake could lead to poverty, malnutrition and hunger. In an attempt to
alleviate some of these potential problems, several institutional and non-institutional
sources of rural credit have been made available to Africans. It is hoped that, in the long
term, credit will enable the poor to invest in agricultural and non-agricultural productive
assets, to adopt new technologies and farming methods, and to minimize environmental
degradation. Bangladesh, like other developing countries, has traditionally experienced low
productivity, low income levels, low domestic savings, unemployment, and malnutrition.
The Bangladesh government, through the Bangladesh Bank , established Rural Banks to
channel credit to productive rural ventures and promote rural development. Rural
development is a strategy intended to improve the economic and social life of the rural
poor (World Bank 1975). Rural credit has been used in Bangladesh to enable the poor to
weather shocks without selling the productive assets the poor need for protection against
future shocks (FAO 1994). Lets have a short trip about rural banking.

Rural banking is the process of conducting banking transactions out in the country where
bank branches are too far away to be of use. Rural banking is popular for very small towns
and farmers who live far away from areas of larger population and cannot make the drive
to these locations whenever they need to use banking services. Typically, an agent of the
bank will visit these rural locations and offer to make transactions in an official capacity.
Rural banking is a common practice in places where banking institutions are few and far
between and people who need to carry out banking transactions may have difficulty
finding a way to do so. With modern technology, more and more people have access to

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 online systems that allow them to conduct certain types of banking without a nearby
branch, but this technology is not available for everyone, and demand for rural banking is
still high in some areas (Sathyajith S Kumar) .

According to Moshi conference(1969), the purpose of rural development is “a rise in the

standard of living and favorable changes in the way life of the people concerned”. However,
there is some anecdotal evidence that many beneficiaries of rural bank credit are salaried
workers, whose likelihood of loan repayment is believed to be better than that of the small
scale rural producers. There is also some evidence that loan repayments use the credit for
purposes other than those for which the loans are intended. Much analysis have not been done
on the effectiveness or impact of Bangladeshi rural bank on rural farmers. So I think this type
of research is very important for our agriculture and farmers.

STATEMENT OF THE PROBLEM:

The Bangladesh government has made several attempts to promote rural development in an
effort to increase the living standard of the people who reside in rural areas. These projects
have failed for several reasons, including the high cost of living for farmers, and the lack of
coordination between government agencies. More farmers in the rural areas do have problems
in dealing with the rural banks or the credit institutions. Some of these problems include
preparing viable business proposals and collateral securities that the banks do demand.
Meanwhile, majority of the farmers are not well educated in order to plan or write their own
business proposals. In addition, it becomes very difficult for the farmers to secure loans
because of the collateral securities demanded by the banks. Some of the banks even look at
the scale of the farm before granting loans. The most alarming problem that the farmers do
face is the high interest rates or bank charges. It is very difficult these days for the farmers to
borrow money from the rural banks because of the high interest rates. More of the farmers do
even end up by selling their lands or assets in order to pay the loans they have borrowed. This
research will therefore look at the impact of rural banks on farmers in the rural areas.

JUSTIFICATION OF THE STUDY:

As Bangladesh is an agro-based-country, agricultural sector and farmers can play an

important role for economic development .Study on agriculture and on farmers are necessary

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for the development of this sector. More or less 80 percent people directly or in directly
depend on agriculture for their occupation . A major part of our GDP comes from agriculture.
So, productivity in agricultural production should be increase for the national development.
But no systematic study so far has been conducted on this topic sector. Since bank is an
financial institution, it should be establish in rural areas to serve rural farmers. As a profit
making organization banks fear to establish their branch at rural areas. But it has been that
rural banking is indispensable if the nation is to develop its rural area will development of
one’s rural area may not be realized it the serious of commercial banks are not at the reach of
our rural dwellers. That’s why production possibility of our country is hampered. Again, our
country is not so far advanced in the research on agriculture as compared to other developed
countries. As a result farmers of our country is in backward position. My proposal will give
importance to the impact of rural banking in the life and activities of farmers. It will provide
information about different agent and organization involved in rural credit .The main
objective of the study is to identify the impacts of rural banking on rural farmers. I have
selected Bogra district because most of the people in this area are farmers and I have the
locality there. The study will be helpful for policy makers in formulating policy concerning
the development of agriculture and farmers. So I think my research will effectively identify
the key factors that impact farmers in case rural banking transaction. I also think that, after
completion of my research I shall be able to provide an effective recommendation for rural
bank as well as government to make effective banking system that is helpful for farmers and
economy of Bangladesh.

AIM OF THE STUDY:

The main aim of the study is to identify the impacts of rural banking on rural farmers.

OBJECTIVES OF THE STUDY:

The specific objectives includes:

 To find out the importance that rural banks have on farmers in Bogra district.
 To find out the impact of rural banks on the rural farmers.
 To understand the rural banking system .
 To identify the problems rural banking system .
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  To know the attitude of farmers towards rural banking in Bangladesh
 To attempt to offer suggestions and recommendations based on the findings of the
research.

RESEARCH HYPOTHESIS:

My hypothesis is that rural banking is the single most important driving force behind rural
farmers’ development. The aim of the study is to seek evidence to examine the hypothesis below;

Null hypothesis (H0): rural banking promotes rural development.

Alternative hypothesis ((H1)): rural banking doesn’t promote rural development

RESEARCH QUESTIONS:

The leading questions that will be proposed to pursue are:

1. What benefit do you get from rural banks?

2. What role do rural banks play in your community?
3. Do all kinds of farmers get loan from the rural banks?
4. Generally, what impact do rural banks have on you in your farming?
5. What other strategies do you think should be implemented by rural banks to help rural
farmers?

LIMITATIONS OF THE STUDY:

 This study will be limited to the impact of rural banking on rural farmers. There are a
number of factors that boost rural development but very limited mention will be made
of them and their impacts.
 The study will be limited to selected farmers in Bogra district.
 Unavailability to required published documents.
 I had to face some limitations to collect some information about rural banking of bogra
district.
 Lack of my experience and efficiency to prepare the standard report.

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  Time constraint was also one of the factors that curtailed the scope of the study.

SIGNIFICANCE OF THE STUDY:

The result of this study will help to create an awareness of the function of the credit unions or
rural banks in the rural areas to the people of Bangladesh and the policy makers. This would
enable the nation to adopt strategies which will help to achieve the objectives of the rural
farmers. Finally, the findings of the study will provide data base for further research work. So I
think this is very important study for the farmers as well as agriculture of Bangladesh.

REVIEW OF THE LITERATURE:

This section of the study seeks to find out what others have written about the subject matter
.This section primarily deals with what other authors have done in regard to this subject
matter. But in Bangladesh few works have been done in regard to this subject. So I have
reviewed most of my literature from foreign authors.

Samuel Kewaku Ebeng (2008) ,Ghana. He conducted a study at Abokobi areas. The main aim of
the study is to identify the impacts of rural banking on rural farmers .This study examined the
impact of rural banking on rural farmers in Ghana. The convenient sampling procedure was used
to select thirty (30) farmers and four workers at the rural bank studied for the research.
Regression analysis was the major statistical tool used to analyze the data collected from the
rural bank. SPSS and Microsoft Excel software were used for the analysis. From the research, it
was found out that the higher the interest rate, the lower the demand for loans.

Namara Martha (2012) conducted a study in Uganda . This research papers under the topic
“Rural Banking in Uganda: It’s Impact on Rural Farmers”. The main aim of the study is to
identify the impacts of rural banking on rural farmers. This study examined the impact of rural
banking on rural farmers in Uganda. It was found out that all the farmers do save their monies at
the financial institutions. In addition, the major type of account they do open is a Savings
Account. 66.7 percent of the farmers have applied for a loan before. 33.3 percent did not even
attempt to apply for a loan because of the fear they have for the high interest rates. Some of the
requirements needed to borrow money are a viable business proposal or a business plan, four

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guarantors who are salary workers and collateral securities. The reason why the banks do ask for
these items is to protect the interest of the bank and propel customers’ commitment to payment
of the loan. In addition, the interest rates are too high for the small or peasant farmers to cope
with. This is because, those who borrowed money from the bank, found it difficult to pay the
loans back. This resulted in the sale of assets and the collapse of most of these farms.

Sharma (1967) stated that for agricultural development, credit is an important input which
ensures adequate working capital as well as infrastructural development. Adequate credit
increases the agricultural output. Agricultural credit and agricultural development goes by hand
in hand, hence the farmer should be provided adequate and cheap credit (Dutta and Sundaram,
2005). It is supported by Kanthimathinadhan (2005) and suggested that without cheap credit is
not possible for small and marginal farmers to survive.

Shetty (2004) and Shivaloganathan suggested in their work that better institutional credit
facilities is highly essential for agricultural growth. Shivaloganathan suggested multi-agency
approach in order to fill gap between supply and need of credit in agricultural sector.

Pathania(1987) analyzed the utilization of cooperative credit in agricultural sector and concluded
that with the proper utilization of Cooperative credit the farmers can increase their productivity.
It was strongly supported by Sharma (1989), Modi and Rai (1993), Sathey (1996) and Patnaik
(1999). Mamoria and Tripathy (2003) rightly stated that the agricultural output and efficiency
largely depened upon the inputs applied and methods adopted. B.Subrahmanyam (2005) viewed
that Cooperative rural credit delivery system has been farmer-friendly and has out reached to
serve agriculture.
Uma (2012) conducted a study on impact of rural banking on farmers. The main objective of the
research was to identify the key factors that impact the farmers. After a effective research she
found that the more interest rate is high the low the demand for credit among the farmers. She
suggests to reduce the rate under the control of farmers.
Ubam (2012) make an study on “Effects of Rural Banking Scheme on the Investment
Potentials of Rural Farmers in Ebonyi State”. The main objective was to find out the impact of
rural banking scheme on investment potential of rural farmers. The study determined the effect
of rural banking scheme on the investment potentials of rural farmers in Ebonyi State. A total of

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218 farmers and 6 banks were selected using multi-stage random and purposive sampling
techniques respectively. Data collected were analyzed using both descriptive and inferential
statistics. Results showed that most (90.8%) of the respondents accessed loans from NACRDB
Ltd and also there was an increase in the volume of loan disbursed to farmers between 2003 and
2004 and a continuous decrease between 2005 and 2007. Bureaucracy (61.9%), distance to the
bank (55.5%), level of collateral (54.1%), size of farm (49.1%) and credit worthiness (39.4%)
(Table 2) affected significantly the amount of loan demanded by farmers.

Jinan et al.(2008), conducted a study on the topic: impact of rural development scheme of
islami bank Bangladesh limited on beneficiaries in Mymensingh area. The present study was
conducted to assess the impact of investment provided under “Rural Development Scheme”
(RDS) of the “Islami Bank Bangladesh Limited” (IBBL) on the basis of using data collected
from 25 respondents of each of group of investors, agriculture and business of the five selected
villages in sadar upazila of Mymensingh district. Total household annual incomes were Tk.
59696 and Tk. 87332 respectively for the agriculture group and business group. The
beneficiaries have increased their income (61 percent in agriculture sector and 89 percent in
business sector) by using RDS credit. After joining the RDS, there was a remarkable
improvement in the living standard of the participant households.

METHODOLOGY:

This chapter discusses the research design, selection of the area, the population and sample. It
also discusses the instruments used in the data collection, the procedure for data collection and
the method for data analysis.

THE RESEARCH DESIGN :

The research design used is survey design. Research design is the specific data analysis
techniques or methods that the researcher intends to use. The survey design involves the
collection and analysis of data, and finding out the answers concerning the current status of the
subject. Also, it is a study of variables in their natural setting or under usual circumstances. This
comprises observation of facts, formulation of hypothesis, collection and classification of data,

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interpretation of data, formulation of theories, application of facts and predictions. Since human
behavior is difficult and cannot be predicted, it makes the results of the research at times not to
be applicable to the population.

SELECTION OF THE STUDY AREA:

In the line of the objectives of the study , Bogra district will be selected for conducting the
research

POPULATION :

The target population is farmers in Bogra district, specifically, experienced farmers from the
area. I shall provide some questionnaires to Bank in that locality .

SAMPLE AND SAMPLING TECHNIQUE:

The convenient sampling procedure will be used to select thirty (30) farmers for examination.
The convenient sampling method will be used because of the sparsely distribution of farmers at
the study area.

INSTRUMENT :

A questionnaire is the major instrument that will be used to collect the data.ie primary data. The
questionnaire will be used in order to get a standard form of answers or response.

DATA COLLECTION PROCEDURE :

Thirty paper questionnaires will be used, one for each person or respondent. The questions will
be read for them to answer. Male and female farmers will be interviewed. That is, equal chances
will be given to them in order to get a fair or a balance response from the male and female
farmers.

DATA ANALYSIS :

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Frequencies, percentages, bar graphs, regression analysis and correlation coefficient will be used
to analyze the data. SPSS software and Microsoft Excel will be used for all the analysis.

ACTIVITY SCHEDULE:

activities Duration
Review literature and collection of related 1st April-15th April, 2015
research report
Refining methodology and preparation of 16th April -15th May
research proposal
Preparation of interview schedule 16thMay-31th May
Data collection June
Analysis of data July
Research(Thesis) writing August
Submission of the thesis 1st week of September

EXPECRED OUTPUT:

If I accomplish the above items of this research successfully then I will expect the following
results may come from my study-

 Research report
 Policy recommendations
 Publication as an article in the journal.

CONCLUSION:

Bangladesh is a developing country. About 31.5 percent of the populations of the country
live below the poverty line (BBS, 2010). Annual per capita income of Bangladesh is about
US$1190 (MoF, 2014). Agriculture is still the main source of income for majority of people.
Quite a few people also engage themselves in some government or non-government jobs.
In spite of the development of new potential sectors as mentioned above Bangladesh has
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been continuously facing the problem of poverty. Poverty reduction in a country like
Bangladesh is very difficult as well and a challenging task. So for the development of our
country , it is important to develop the life of farmers providing the proper facilities at proper
time. For this purpose research on agriculture and on farmers are very essential.
BIBLIOGRAPHY:

1.Bangladesh Bureau Of Statistics .(2010).Statistical Year Book Of Bangladesh .Ministry Of

Planning, Government Of Peoples Republic Of Bangladesh,Dhaka

2.http://Www.Grameen.Com/Index.Php?Option=Com_Content&Task=View&Id=949&Itemid=1
99
3.http://Www.Doublegist.Com/Developmental-Impact-Rural-Banking-Nigeria/

4.http://Www.Thedailystar.Net/Newdesign/News-Details.Php?Nid=177457

5.Jinan,T.Basgar,N. Jahan And Khanam,T.S.(2008). Impact Of Rural Development Scheme Of

Islami Bank Bangladesh Limited On Beneficiaries In Mymensingh Area.Post Graduate
Thesis. Department Of Agricultural Finance , Bangladesh Agricultural University,
Mymensingh.

6.Kwaku, A.(2001). The Legal And Regulatory Frame Work Of Micro And Rural Finance
Institutions In Ghana,Papar Presented At Rural Financial Services Project Launch
Workshop, Agona-Swedru.Ghana.

7. Mbam, B. N.(2012). Effects Of Rural Banking Scheme On The Investment Potentials Of

Rural Farmers In Ebonyi State.Journal Of Agricultural Research And Development
Vol.2(1). Pp. 031-036, February, 2012, Ebonyi State, Nigeria.

8. Martha,N.(2012). The Impact Of Rural Banking On Rural Farmers In Uganda: Case Study Of
Kabale District.

9.Obeng,S.K.(2008). Rural Banking In Ghana: It’s Impact On Rural Farmers (A Case Study Of
Abokobi Rural Area),Ministry Of Finance ,Ghana.

10. Khandker,S And Zaman,H.(2014). Impact Of Micro Finance, Grameen Bank.

11. Uma, D .(2012). Impact Of Co-Operative Loan On Agriculture Sector: A Case Study Of
E.G.District Of Andhra Pradesh, Vol.I(ii), Issue.4(2). International Refereed Research
Journal. pp.(74-84). Www.Researchersworld.Com.

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