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Promoting Financial Inclusion
Can the constraints of political economy be overcome?
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Preface and acknowledgments List of abbreviations Executive Summary 1 2 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 Background What is financial inclusion? Financial inclusion – is it just a distant dream? Penetration of banks – a limited effort at inclusion Credit – needs a huge impetus Savings through deposit accounts – an encouraging trend, perhaps... Coverage through microfinance Limited coverage under micro-insurance – but does credit-life give real life cover? Coverage of the cooperative system – extensive outreach, intensive problems ...and the half-forgotten Regional Rural Banks The policy conundrum – is it prudential or simply restrictive? The business correspondent model – what is its potential? No frills accounts – but also no thrills, perhaps? Micro-insurance regulations– enabling if not adventurous Special funds for financial inclusion – what’s the resulting impetus? Cooperatives and financial inclusion – resuscitation yet again Amalgamation of RRBs – undermining the mandate The informal sector “credit card” schemes – a step forward KYC and identification issues – helping cope with contemporary concerns Branch licensing – policy incentivises inclusive expansion 18 v vii xi 1 2 4
4.10 Payment systems – facilitating inclusion with a few small steps 4.11 Interest rate deregulation – another small step forward 4.12 Consumer education and protection – valuable efforts...
4.13 Conclusions – inclusion constrained by regulatory prudence 5 5.1 5.2 5.3 5.4 5.5 6 6.1 6.2 6.3 Challenges to achieving financial inclusion Broad challenges to financial inclusion Product specific challenges Challenges in offering micro-insurance Challenges faced by the cooperative system and rural banks Conclusions – What are the challenges and how can they be overcome? The way forward –...