Bank Preference in Punjab

This has reference to the letter of N P Mohapatra (“Financial Inclusion”, EPW, 16 August 2014) on my article, “Bank Preference for Financial Inclusion in ­Rural Punjab” (EPW, 26 July 2014). Mohapatra highlighted the role of the regional rural banks (RRBs) on the basis of a para in my article which quoted page 3 (Preface) of the Rangarajan Committee report on “Financial Inclusion, 2008”. In this regard, first, my study has brought the revealed preference of villagers in Punjab for commercial banks vis-à-vis small banks (cooperatives, as there are no RRBs in that area). Therefore, refuting my conclusion through a discussion of the comparative performance of two or more agencies would have been more convincing than looking at the role of any one in isolation.

Revealed preference of account holders for an agency as discussed in my article does not rule out the role of any other agencies (RRBs or cooperatives). More­over, preference on the basis of facilities available will come in consideration, if there is the presence of branches of different agencies within approachable distance in an area. Second, he is mistaken that I was referring to RRBs when I was commenting about the regional banks or small banks to be licensed as per the draft guidelines issued by the Reserve Bank of India on 17 July 2014. These guidelines are a follow-up to the recommendations of the Nachiket Mor Committee.