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This book addresses the gaps in the present institutional structure of inclusive finance framework in India. It provides a comprehensive review of the role of banks in financial inclusion policy and micro-finance landscape in India at present. It identifies the key issues within the banking system which prove to be obstacles in the way of achieving financial inclusion and sustainable growth. The book conceptualizes inclusive banking, delves into the theoretical foundations thereof and suggests an institutional framework to avoid overlapping of their functions in order to ensure profitability. It reviews the existing market structure and competition in the inclusive finance arena while considering the role of banks, micro-finance institutions and SHGs in financing the poor.

The book proposes a distinct change to the existing business model, examines the bank business model for inclusion and how the banks can and should treat the micro lending clientele as their core client base to counter the issues of profitability and competition in today’s banking sector. It also discusses some of the latest initiatives in inclusive finance and the importance of entrepreneurship development experiments in India and their efficacy in comparison with the micro-lending model.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Inclusive Banking—Concept and Context

Abstract
The ‘Pandemic’ has wrought untold miseries on the poor. Millions of people are estimated to be pushed into extreme poverty. As the world is turning ‘upside down’, this is the time to revisit the existing system of financial inclusion and to reconsider the role of banking sector in providing financial services to the low income population. With new technologies coming into vogue, banks in India can play a significant role in the poverty alleviation process. This chapter emphasizes the need to change the narrative of financial inclusion and indicates that the low income population can be tapped by the banks as a viable business segment.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 2. Inclusive Finance and Economic Growth: The Theoretical Underpinnings

Abstract
The theoretical underpinnings of financial inclusion help to understand the limitations of credit markets in providing access to finance to all those who are willing and needy. The conventional theory of market failures, incomplete markets and the stylized facts in the theory of financial inclusion bring forth the nuances of financing the poor. The theoretical perspective on inclusive banking provides a concrete ground for the banks’ role in the economy beyond their microeconomic stature as business entities.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 3. Inclusive Finance and Commercial Banks

Abstract
The financial inclusion landscape consists of diverse entities including banks and specialized microfinance institutions. In the current economic environment, public sector and private sector banks would have to play a more active role in financial inclusion. In fact, they cannot afford to be content with their present passive supplier agency role. The chapter examines how the banks as a channel of financial inclusion can play their role effectively. A theory of change approach is applied in the context of inclusive banking.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 4. The Non-Bank Sources of MicroLending in India

Abstract
Indian microfinance ecosystem consists of a large number of specialized non-bank institutions that are active in the field of microlending for many years. But this growth of the microfinance sector is geographically imbalanced, dominated by the large NBFC-MFIs and highly dependent on the banking sector support.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 5. Inclusive Banking: A Political Economy Approach

Abstract
The political economy of a country determines the long-term feasibility of any substantial change taking place in its financial inclusion space. In India, local political and social factors play an important role in microfinance. The political economy approach examines the competition among various institutions in the microfinance sector. The proposed inclusive banking model rests on the foundations rooted in the framework of political economy. The gaps and certain oddities in the implementation of inclusive finance are highlighted from political economy perspective, to ensure their elimination for a more efficient model of inclusive banking.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 6. Role of Government in Inclusive Banking in India

Abstract
The development of financial inclusion policy and a comparative role of various financial institutions depend on the ideology of the state. The policy of financial inclusion is not a stand-alone policy. It works in tandem with the monetary and financial sector policies at macro-level. In federal countries like India, the relationship dynamic between the central government and the state governments determines the regional development of inclusive finance. The role of government in the inclusive finance policy is pivotal in giving it a new direction.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 7. New Developments in Inclusive Finance

Abstract
The inclusive finance sector is continuously evolving with the socio-economic and technological changes in the surrounding environment. Some of these latest developments related to inclusive finance in India are discussed in this chapter.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Chapter 8. Reimagining the Banking Business Model

Abstract
The current microfinance policy in India needs to be reconsidered due to issues like lop-sided growth, regional imbalances and ‘mission drift’. A clear-cut elaboration of a new business model is provided as a roadmap for the inclusive banking policy in India. For adopting the new business model, the narrative of financial inclusion should be changed. The low-income customers should be treated as the ‘bulk’ of the population and not as the ‘bottom’ of the pyramid.
Lalitagauri Kulkarni, Vasant Chintaman Joshi

Backmatter

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