In their book, In Service of the Republic, Vijay Kelkar and Ajay Shah warn against distortions caused by the government and its entities being both player and umpire in various sectors . In financial services, we have an array of apex financial institutions (FIs). Some of these have quasi-regulator status, a market-development mandate and also commercial aspirations—a problematic trinity. It is pertinent to examine the role they play, whether their interventions are strengthening the markets they serve, or, indeed, if they have become an anachronism. We focus here on Small Industries Development Bank of India (SIDBI) for the micro, small and medium enterprises (MSME) sector.
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