Rural Business Owners, Banker and Services: A Behaviour Model

Abstract

Rural business owners have a continual need for credit. The lack of access to institutional finance is partly mitigated by the mega financial inclusion program in India (Pradhan Mantri Jan Dhan Yojana, PMJDY) in August 2014. Other than access, exclusion can also be caused by individual characteristics, intention, attitude, perceived barriers, awareness, and suitability of product and services, banking requirements as well as banker’s behaviour. This research proposes and validates a comprehensive model of outcome based on these factors in the context of PMJDY. Business owners from rural areas who opened bank accounts under PMJDY were the respondents. The study finds that the banking outcome is significantly influenced by banker behaviour, product awareness, and the general attitude towards banking. The attitude towards specific products, demographics and income level of the rural businessmen do not influence the outcome of the banking process. Perceived inconveniences in banking or deterrence influence the intention and general attitude. Thus, the general attitude moderates the inconvenience and outcome. The product awareness is influenced by the customer’s attitude and banker’s behaviour, which in turn influence the outcome; an increase in the level of awareness will positively influence the outcome and should be the second step of financial inclusion.