Publication: Dvara Research

Infrastructure facilities such as clearing houses, depositories, stock exchanges, and commodity exchanges are the backbone of any financial system.

The AP microfinance crisis has raised significant questions on the design of the financial system that best ensures inclusion. The crisis has revealed deep discomfort with the regulation of Non-Deposit taking Institutions (NDI). Some observers have equated NDIs to moneylenders.

In this paper, we present two stylized models of the financial system. We make the case that in order to realize the potential of a well-functioning complete financial market, financial system designers and financial service providers will need to think about ways to deliver financial propositions that are customized to individual households by responding to their unique circumstances.

Markets typically exist within the boundaries set by the state. The financial markets are no exception to this. Mobilisation and allocation of capital – the key roles of the financial system – are done within the framework defined by the government.

What does it mean to be a farmer in Kurnool (a district in Andhra Pradesh)? One part of the district grows commercial crops such as sunflower and tobacco while another supports nothing but paddy (the Telugu-Ganga Canal influences the soil in way that only paddy can be grown here).

Though India has deep financial infrastructure comprising a large number of bank and post-office branches; agricultural cooperative societies; and, now, micro finance institutions; there still remain gaps that have prevented us from leveraging the full potential of this financial infrastructure.

Gram panchayats in India are independent, constitutional bodies of governance that operate at the level closest to the people or the grass-roots.

Puneet Gupta is restless and visibly excited. The last ten days have been the culmination of many days’ efforts in creating access to finance to deserving high quality Microfinance Institutions (MFIs).

The financial sector crisis in Andhra Pradesh seems to be playing out like a very bad dream that doesn’t end.

In what could become a welcome trend, the RBI has started putting out detailed discussion notes on future policy steps.