These developments would lead to much greater demand for banking activity in rural areas. The two-fold implications of these developments for the banking sector are apparent. First, with higher financing needs of such new activities vis-a-vis traditional ones, the overall financing intensity of agriculture is likely to experience a manifold rise.
Second, along with growth in rural infrastructure, there is also likely to be an increase in rural non-farm activities, such as repair activities, education, housing, restaurants and medical services. These activities, both traditional and emerging ventures, would be available for financing by the banking sector. Thus, as the economy begins to grow rapidly, the rate of financial intermediation is expected to increase further.