Central Government Approach to Rural Financial Services in India (1969-1991)
•1969 : 14 major private banks are
nationalized
•1977 : Central government institutes regulation
requiring all banks
wishing to open branches in “banked” locations, to open four other branches in “unbanked”
locations
•1969 –
1994: Number of bank
branches in India grows from 7000 to 60,000 (2/3 in rural areas)
•1977 –
1990: Economists give
analytic proof that rural branch expansion program has a positive correlation with
poverty alleviation...
•But surely
at a HUGE cost (rural infrastructure, subsidies, bad loans, poorly developed financial
instruments, corruption, inefficiency, etc.)
