In Villages, Credit is Still All About Moneylenders

...........The Reserve Bank of India’s argument that new banking licences are needed to achieve financial inclusion, mainly in rural areas, has new research supporting it, thanks to banks’ falling share in rural credit. Policy makers’ push to increase institutional credit to rural areas has had reasonable progress since independence, but only at a snail’s pace. The performance of banks, which have been assigned targets by the regulator to increase their rural credit, has been dismal as their share of total credit fell to less than a quarter in 2002, from over 29% a decade ago, a research paper from the Reserve Bank of India’s economists show...............

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