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?

  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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