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

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A Few Baby Steps, Not a Great Leap Forward

Mor on Financial Inclusion

Despite decades of effort, India’s record in the area of financial inclusion remains unsatisfactory. Nearly 60% of India’s population does not have a bank account; 90% of small businesses have no link with the formal financial sector.

The Nachiket Mor Committee on financial inclusion, which submitted its report last December, wants to change this state of affairs. It thinks we can do a lot better through a combination of new institutions and more stringent regulatory fiat. It is useful to remind ourselves that banking is a commercial proposition and that inclusion will be a drag on bank profits in the medium term. So, inclusion will not happen overnight. Some of the committee’s proposals may help us take some more baby steps. A great leap forward is not feasible.

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