RBI governor Raghuram Rajan’s promise of easier entry of foreign
banks into India is welcome. This would raise competition and efficiency and
bring in technology and expertise to foster financial inclusion. Much of rural
India lies outside the reach of banking, because of the high cost of
traditional banking. True, foreign banks also operate largely in urban areas:
of the 333 foreign bank branches, 331 are in urban areas, of which only 44 are
in under-banked districts..............
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1 comment:
Surprisingly, except for some occasional mention about ‘financial inclusion’ reforms in India seems to be an urban, if not metropolitan affair. When we talk about penetration of banks in rural areas by importing ‘foreign banks’ or via Banking Correspondents or earlier through Self Help Groups financed by commercial banks, we are forgetting the existence of cooperatives and private sector organisations which are already there doing a lot of service. Just as we do not want rural people to become literate for selfish reasons, we do not want rural institutions rural institutions to upskill for fear of their eating into urban business. Reforms need to spread to rural areas. For this, literacy need to be improved, rural institutions including rural financial institutions need to be allowed to survive and become viable.
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