Framework of Understanding of Rural Financial Market Facilitating Entrepreneurship Activity in Indian Rural Economy (original) (raw)

Social Science Research Network, 2010

Abstract

With financial liberalization becoming a common parlance among the policy makers and financial inclusion making business sense the growth of rural economy is vivid. During recent years, the RBI along with the Central Government has taken steps to bring the rural economy under the institutional framework of Banking and Finance. The financial institution has become more aggressive in financing to rural economies which makes business sense rather than mere social obligation or meeting targets. In order to effectively use the finance available at cheaper cost in the rural areas, development of social capital as well as entrepreneurship becomes imperative. Developing Entrepreneurial culture entails the development of a positive attitude of all the related sectors which is to be motivated by the financial institutional supporting system. Potential small entrepreneurs need a comprehensive plan to transform their business ideas into working operation minimizing the risk factors with a supportive environment provided by the Government. Although it is the social responsibility of the Government to protect the Entrepreneurship activities by framing specific policy decisions in the matter of area and nature of business. The mode and use of finance makes or mars the business activity of small enterprises. So the understanding of several rural financial markets models can help better utilization of funds. The aim of this paper is to understand the functioning of the rural economy and to provide a frame work within which the evaluation of financial intermediation in rural economy can be understood. This paper also provides an analytical understanding of the linkages between the Indian rural economy and the global markets.

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