Financial inclusion seems to be the latest buzz word. I have been hearing it over and over again in the last month or so and it seems to be everywhere. This is financial services own "bottom of the pyramid"story, and as usual our press has taken to it - the latest flavour of the month.
Micro finance and micro credit have become big money spinners, while RBI seems to be coming up with an innovative plan of accrediting village money lenders to bring them into the mainstream financial system. Micro credit has drawn some flak for what people claim are exorbitant rates that they seem to charge. Do they? am not too sure, I take the argument that the Micro finance institutions dole out about high cost of delivery and the related crap. There is scope for lower rates, it just needs more competition but I don't think regulation is the way to go.
But coming to my main observation. The main hitch that most of these organisations claim is the lack of grass root level staff who can assess credit risk and effectively deliver the services. The typical last mile problem faced in a B2C industry. But for those who are old enough to remember, Indian Banks used to have a 'pygmy collector' who used to go around to small businesses and such daily and collect money and deposit to the bank next day. The pygmy collector used to get a small commission ( i think, am not so sure), knew the market like the back of his hand and had tremendous linkages. Why didn't the Indian banks use this system to reach to the "financially excluded"? Why not revive this scheme ( am sure it still exists in a few banks, but as usual waiting to be discovered by the ICICI , HDFC banks of the world) - Bring it on, let them loose, and see the low cost deposits swell and see that level of inclusion soar.......
As an aside :
I think I have become a weekend blogger, new job barely leaves time to exist.... but will try to be proactive...
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