Publication: LiveMint

For two decades, India has doubled down on the policy prescription of providing financial ‘last-mile access’ to its rural and poor citizens. Has the effort succeeded? It depends on who you ask.

The microfinance industry has witnessed moves by the Reserve Bank of India (RBI) to revise the regulatory framework (March 2022) for it and also caution it against an exclusive focus on business growth (November 2022).

An RBI paper with bold proposals for this sector should stir a discussion on broader policy reforms

This problem can be solved by link-ups with large supply chains and networks that disperse risk and place small businesses in a better position to get loans and attract equity investors.

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 .

The Indian government has set into motion the implementation of several schemes that are aimed at improving both the liability and asset sides of the balance sheets of banks and non-banking financial companies (NBFCs), so that lending to the real economy can increase. The most recently introduced are four schemes.

Cash withdrawals through micro ATMs have surged in the wake of covid-related disruptions. But a considerable number of these transactions fail, thus worsening the pain of the vulnerable sections.

Cash withdrawals through micro ATMs have surged in the wake of covid-related disruptions in the operations of banks and business correspondents.
But a considerable number of these transactions fail, thus worsening the pain of the vulnerable sections.

The present government has set great store by micro, small and medium enterprises (MSMEs) and entrepreneurship as engines of growth.

Individuals and households need access to reliable financial services like a safe and accessible place to save and affordable credit.