Term deposits are one of the most common means of investment across the world – this also holds true in the rural sub-districts of Java. A majority of rural clients prefer term deposits in commercial and rural banks because of the perceived guaranteed safety and assured return. This Note highlights the experiences of rural banks in mobilising term deposits, the issues and challenges they face, and the strategies adopted by them to revive their portfolio and growth. This therefore also offers an inadequately realised growth potential for rural banks. Rural banks can develop an edge over commercial banks to capture term deposits. BPRs offer higher interest rates, lower minimum deposits, usually do not charge penalties on early withdrawals, and have convenient local offices. However, to develop and maintain a competitive edge BPRs need to understand their target segments and fine tune their products, services, and marketing efforts. This calls for better market intelligence as well as committed and capable institutional resources.

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