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Financial Access in Post-Reform India$
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T.A. Bhavani and N.R. Bhanumurthy

Print publication date: 2012

Print ISBN-13: 9780198076650

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780198076650.001.0001

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The Way Forward

The Way Forward

(p.154) 9 The Way Forward
Financial Access in Post-Reform India

T.A. Bhavani

N.R. Bhanumurthy

Oxford University Press

The last chapter recapitulates the salient features and summary of findings of the study and suggests some policy measures that enhance financial access to real sectors. Empirical analysis of the study clearly indicates that the unorganised segment covering agriculture, micro and small enterprises (in industry as well as services sectors), has limited financial access with wider financial resource gap. The often-cited reasons for the limited financial access of the unorganised segment are—high risk and transaction costs. Hence, solution lies in reducing risk and transaction costs. Majority of the existing policies including priority sector lending do not focus on reducing risk and transaction costs. Microfinance institutions (MFIs) are yet to prove themselves in this respect. These are possible only through the encouragement of local area banks, innovative products linking borrowings to savings and insurance products and either removal of priority sector lending or issue of priority sector lending certificates.

Keywords:   Indian financial sector, financial development, financial access, banking sector, financial resource gap, unorganised segment, priority sector lending, local area banks

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