Rural Financial Institutions Mixing Apples with Oranges K Kaladhar I HAVE carefully gone through Kishore C Samal's note (EPW, February 8) commenting on my paper on 'Retooling Rural Financial Institutions' (EPW, September 28, 1996). Samal has pointed out that low collection rates, heavy dependence on subsidies, use of traditional banking methods, occasional loan waivers, a low outreach, lackadaisical administration without innovative management and political interference as reasons for failure of RFIs in developing countries. He points out that as indicated by me RFIs have ignored manageability in the process of determining viability. I would invite in this connection his attention to the very first paragraph of my paper where all the reasons cited by him have already been analysed as sources of failure of RFIs and the point of departure that I made in the paper was to look at the RFIs from the operational perspectives, in terms of organisational culture, removing informational asymmetry, etc. Incidentally, if Samal were to trace the reasons for low collection rates, use of traditional banking methods, lackadaisical administration without innovative management he would come back to my point of inappropriateness of the strategy, systems and procedures followed by RFIs. As regards occasional loan waivers and political interference, I hold them as self- evident truths. The aspect of outreach in the Indian context has been quite striking compared to many other developing countries and we have done fairly well in statistical terms.
