Rural Banking

This refers to the editorial “Bank on facts” (Business Line, October 1). It is obvious that the present strength of banking financial institutions is insufficient to expand banking services to the masses. Also, it is learnt that the Government — with its limited resources — finds it hard to reach out and cater to the masses; that aptly gives room for the private firms to fill the vacuum. There is no harm in industrial houses applying for bank licences and the same being granting to them, provided there are a host of stringent conditions to be followed by the licence-holders. In the absence of organised financial institutions in rural areas to cater to the financial needs of the people, they (people) are forced to rely on the local unorganised entities/ individuals/landlords; they usually ask for properties in lieu of the money they lend and charge a higher rate of interest. This is because of the low penetration of the banking institutions in rural areas. The standard of living can be improved by letting the private firms start the banking operations in rural areas. To address these concerns, the RBI should perform the role of a ‘watchdog’ . 

- S. Lakshminarayanan, Cuddalore HBL