ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Nachiket MorSubscribe to Nachiket Mor

Inclusive Financial Systems

Besides facilitating overall economic growth, finance can help individuals smooth their income, insure themselves against risks and broaden investment opportunities. Empirical evidence shows that inclusive financial systems significantly raise growth, alleviate poverty and expand economic opportunity. This paper lays out several principles that should be kept in mind when designing such systems, supported by a case study of ICICI Bank.

Expanding Access to Financial Services

Despite a plethora of initiatives, it is estimated that over 500 million people in India continue to have no access to financial services. While ensuring the accessibility of such services does not constitute the sole panacea for economic growth, there are definite causal links between ensuring such increased access, growth and poverty reduction. To make real progress on this front, India needs to redraft its current approach to providing financial services. Steps that are tailored to meet local needs for finance need to be worked out by drawing on past experiences and studying those adopted by other countries. However, three steps are vital as preliminary requirements, (i) increased sophistication in bank regulation, (ii) development of basic financial services infrastructure, and (iii) an adaptive regulatory framework.

Organisation of Regulatory Functions:A Single Regulator?

Since the beginning of the financial sector reforms in early 1990s, boundaries between products and intermediaries have been blurring rapidly. The entry of several large government-owned as well as non-governmental financial sector participants in a variety of related domains such as securities trading, investment banking, commercial and retail banking, insurance and asset management which are regulated by independent bodies has posed some unique supervisory challenges for the Indian financial system. The paper attempts to argue that such a system of regulation not only artificially fragments the financial markets but also exposes the system to the very real danger of participants behaving as mini-super-regulators as they seek to optimally allocate capital dynamically between these fragmented market

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