Microfinance needs reform more than credit backstops if India wants to avert another crisis in this sector
Liquidity support by the Centre may offer symptomatic relief, but India’s microfinance sector needs a structural recast. Without reforms to address recurring cycles of over-lending and loan stress, another credit guarantee package will only postpone the next crisis in this fragile sector.
An Alternative to Privatization of Public Sector Banks
The troubles of the banking sector, and public sector banks (PSBs) in particular, are well known. Reform proposals have focused largely on ownership and have issued strident calls for privatization. Even if there was political support for this idea, there are a few important challenges.
