Rural money market in India

A well developed money market may figure crucially in the promotion of economic development by allocating saving into investment in a competitive way as well as by promoting safety and liquidity of financial assets. The Indian rural money market is distinguished by its duality with its organised and unorganised sectors, with different business practices and rates of interest. The organised sector consists of the commercial and co-operative banks and government agencies and the unorganised sector chiefly consists of money-lenders and indigenous bankers of different types, landlords, traders and merchants. Specialisation has developed between these sectors and funds sometimes flow between them but their links with one another seems very weak. Against this back ground, the chief aims of the present study are:

(a) to investigate the nature, composition and working of the organised and unorganised money markets in the Indian rural economy:

(b) to examine the factors affecting the demand side of agri cultural credit;

(c) to analyse the nature and determinants of rural interest rates;

(d) to discuss the workings of the major organised agencies; (e) to specify the existing links between the dual money markets and to derive any policy implications which may emerge from our study.