RBI is the banking regulator and obviously it has a role in development of the banking industry, right?

Well, over the last so many years what is the penetration of banking in India?

Well about 6-8% of the country’s population has some access to banking. Why we do not have banks with

EXCLUSIVE mandate to cater to retail needs? – savings, current, small business, retail, traders,  – and perhaps with a local bias. For example every small locality – a CP, a Dariyaganj, a Gurgaon, Besant Nagar, Dadar, Chembur…can all have small local banks catering to the needs of the local population. This would create a lot of jobs, can have local directors, can give local loans and will always remain small. This is a brilliant concept, but the ‘co-operative banks’ which were supposed to do this kind of business have failed.

We instead have a super over banked urban India – where the small account holder is too scared to even enter. Most of these banks are too posh for the common man – who is too scared to even go into such a bank!

Such small banks should have no power to give loans above Rs. 1 crore – and all the account holders should also be shareholders. All this will create good supervision and evidence gathering!!

I can think of about 500 banks / perhaps 10 varieties of banks – rural poor, urban poor, senior citizen branches, or senior citizen branches….

what say?

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  1. why only banks all services can follow this model, municipal services, outsourced telecom (large operators lay the fibre- local community decides utlisation) , healthcare, etc.

    In short local community decides micro and state decides macro.

    THAT is how India had 25% of world trade without being hit by the highs and lows

    Of course this will make politicians and bureaucrats redundant and hence unlikely to happen…

  2. Dr Mohammed Ali Khan

    @ Subra
    There is obvious need for such a bank.. Any entrepreneur would have created such a model by this time if there were profits in it..

    But, in our economy where the government is in the ” Commanding heights of the economy”, such banking models are regulated away.

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