Sunday, April 13, 2014

Mor committee report on financial inclusion

The Mor committee report on financial inclusion has not received proper attention in the popular press. I dissect the report in an EPW article.

Very briefly, the Mor committee thinks the job can be better done through a new set of specialised players for whom a different regulatory dispensation is created. I have my doubts both about the viability of these players and the potential for systemic risk they can create. The committee also advocates a stiffening of priority sector targets. The scheme it proposes is rather complex and is likely to run into measurement issues. New institutions are welcome. But we need to get more out of the vast structure we have created for inclusion- regional rural banks and cooperative banks. I outline in my article how this can be done.

A retired banker, writing in EPW, has the same reservations about the new institutions proposed but he is rather more sanguine about the committee's priority sector recommendations. 

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