ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Review of Local Area Banks and Policy Implications for Narrow Banks in India

In the recent past there has been renewed discussion on the possibility of setting up narrow banks to focus on including the population left out of the formal financial sector. Reviewing the experience of local area banks and the landscape of financial inclusion, this paper identifies internal contradictions in the approach to narrow banks -- primary objectives, structures, limitation of size and geography, mainstream banking standards, evaluation of performance. Despite these issues, the existing banks are indeed performing (under severe constraints), and do not give cause for anxiety on solvency and stability.

Ananthamurthy and URA

U R Ananthamurthy was a writer, public intellectual, a philosopher, a keeper of public conscience and much more. The complexity of Ananthamurthy was that he belonged to multiple worlds and was a critical insider in all of them.

Identity for Inclusion

State intervention in India to expand financial inclusion to rural areas has had an interesting history. It has moved away from building state-led institutions to setting policy that pushed financial inclusion through non-state agencies as well. While identity, de-duplication, and authentication were issues that affected the pace of financial inclusion, they were not the most significant problems to be fixed. By allowing the Aadhaar project to set the discourse on financial inclusion, the State has moved away from the Reserve Bank of India's definition of comprehensive and meaningful financial inclusion towards a model that facilitates transactional aspects, with significant costs added at the intermediary levels.

Remembering Baviskar, Revisiting Cooperation

Recalling B S Baviskar's very influential contribution to the sociology of cooperatives is a much-needed corrective in these times when markets are supposed to provide all the answers. This article looks back on this and the long-running difference of opinion he had with the National Dairy Development Board and Verghese Kurien.

Macro View on Microfinance

Microfinance in India: Issues, Problems and Prospects: A Critical Review of Literature by S L Shetty (New Delhi: Academic Foundation) 2012; pp 658 (hardcover), Rs 1,295.

Microfinance Industry in India: More Thoughts

Microfinance institutions need not be treated as holy cows. They do not need any soft regulation. They should be treated on par with any non-banking companies. A comment on Y V Reddy's article on microfinance and a response from the author.

Remembering Shashi Rajagopalan

Very early in her career, Shashi found her calling in the cooperative sector. The work life of Shashi was intertwined with that of M Rama Reddy and the Cooperative Development Foundation (CDF) – an organisation with which she spent a greater part of her working life. Her first phase of work with CDF...

Microfinance: A Fairy Tale Turns into a Nightmare

It was inevitable that the commercial model of microfinance in India, with its minimalist and standardised model of lending, would grow into a bubble and run into trouble. Many microfinance commercial organisations have entered the market in search of profits and are competing to lend to the poor. In the process they have put the "understanding" of the needs of the poor aside and have started chasing targets and numbers. For these institutions, the poor are not seen as human beings having individual identities and needs. Instead they are seen as data points that add up in their profit statements. The anxiety for growth is dictated by the fact that the investors in the market-based models are impatient and look for high returns - and then exit!

Commercialisation of Microfinance in India: A Discussion of the Emperor's Apparel

Most of the early microfinance in India happened through donor and philanthropic funds, which were channelled to not-for-profit organisations. As the activities scaled up, microfinance moved to a commercial format. Using publicly available data, this paper examines the growth imperatives and the transformation processes of four large microfinance institutions in India. It studies the implications of the transformation process and its effect on the personal enrichment of the promoters of the MFIS. It examines the governance processes in these institutions and questions the moral and ethical fabric on which these institutions are built.

Conditions in Which Microfinance Has Emerged in Certain Regions

The paper looks at some macro data on the availability of infrastructure, economic growth, density of population and the availability of formal financial services to examine if any of these factors explain its growth of microfinance in certain regions.

The Maturing of Grameen Bank

through a zero level tolerance even for a possible genuine default. The Maturing of Changed Borrowers Grameen Bank The Poor Always Pay Back: The Grameen II Story by Asif Dowla and Dipal Barua; Kumarian Press, Connecticut, 2006; pp 296, price not specified.

Financial Status of Rural Poor

A village-level study conducted in Udaipur district of Rajasthan attempted to map the financial status of the rural population and the funds flow indicated that the overall asset-savings-income profile of the rural poor was not alarming. However, most of the assets and savings are liquid, forcing the poor to borrow at high cost. The study reveals the failure of financial institutions to penetrate the savings and loan market. It also reconfirms earlier findings that health-related expenses are one of the major causes of indebtedness amongst the poor.


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