20
Dec

What are your views on Consumer Protection?

By Vishnu Prasad, IFMR Finance Foundation

This post is a follow-up to our earlier post where we had invited public comments on Comprehensive Financial Services. In this post we seek your thoughts on the theme of Consumer Protection.

Financial Customer Protection in India has traditionally hinged on the caveat emptor or buyer beware principle, which places the onus of customer protection on the customer. As the financial sector rapidly evolves to meet the complex financial needs of households, it becomes apparent that the caveat emptor approach is an unsustainable approach to customer protection. In addition, India follows a sectoral approach to ex-post customer grievance redressal with each regulator having set up its own grievance redressal architecture. As customers increasingly face an integrated portfolio of services, it is unclear whether this sectoral approach can guarantee speedy and effective redress of complaints. The fragmentation and lack of coordination between the multiple surveillance and monitoring mechanisms further compounds this problem. From this, it is clear that there is an urgent need to create a sustainable and effective architecture for financial customer protection in India.

To view the questions and share your thoughts on this theme please click here.

3
Dec

What are your views on Comprehensive Financial Services?

By Anand Sahasranaman, IFMR Finance Foundation

This post is a follow-up to our earlier post where we had invited public comments on Affordable Credit Delivery. In this post we seek your thoughts on the theme of Comprehensive Financial Services.

Financial inclusion can be said to be complete only when there is access to a suite of appropriate products and services for all the financial needs of a household or enterprise. Households planning for long-term goals such as education of children or retirement planning options, require inflation adjusted returns on investment over substantial time-periods. Households whose asset profile is concentrated in the local village economy need access to investments that will provide them exposure to the national economy. Farmers planning for their next crop require credit bundled with weather insurance that will pay out in case of extreme weather outcomes. An individual who wishes to invest small amounts of Rs.10 a day in a liquid fund must have the option to do so in a seam-less manner. A farmer who requires a life insurance cover of Rs. 8 lakhs must be able to purchase it at a location near her. Each and every household has a combination of such crucial needs that need fulfillment. It is the function of the nation’s financial system to provide accessible and economical product solutions that meet these needs. To make this a reality, there are several hurdles that need addressing.

To view the questions and share your thoughts on this theme please click here.

15
Nov

What are your views on Affordable Credit Delivery?

By Anand Sahasranaman, IFMR Finance Foundation

This post is a follow-up to our earlier post where we had invited public comments on Priority Sector Lending. In this post we seek your thoughts on the theme of Affordable Credit Delivery.

Institutional designs for credit delivery in India can be broadly categorized into three designs – National Banks (including branch-based and agent-based models), Regional Banks and Non-Banking Financial Companies (NBFCs). Despite the existence of these models and considerable innovation in institutional designs, credit penetration in India remains poor. For example, India’s credit to GDP ratio is 76.6%. Similar figures for China, Brazil and South Africa stand at 152.7%, 110.5% and 187.2% respectively. There exists a lot of inter-state and inter-district variation in this metric. For example, while Maharashtra has a credit to GDP ratio of 116%, the same number for Bihar is 16%. From this it is clear that there is an urgent need to improve credit penetration, especially given the large demand for credit in the country and its implications for economic growth.

To view the questions and share your thoughts on this theme please click here.

3
Nov

What are your views on Priority Sector Lending?

By Anand Sahasranaman, IFMR Finance Foundation

This post is a follow-up to our earlier post where we had invited public comments on Payments. In this post we seek your thoughts on the theme of Priority Sector Lending.

Directed lending through programs such as the Priority Sector Lending (PSL) program of the RBI have had a well-established history across many countries at different points in their development curve with different purposes. In India, the PSL Policy has also been an important intervention to ensure that certain sectors deemed as important for national development receive adequate credit. The PSL program has been implemented by the RBI since 1974, when banks were advised to raise credit to priority sectors to the level of 33.3% by March 1979. Today this number stands at 40%, out of which direct agriculture lending has to be 18%. While the need for a Priority Sector Lending program is not in question, there is a need for a deeper discussion on the design, strategies and mechanisms to achieve these objectives.

To view the questions and share your thoughts on this theme please click here.

14
Oct

What are your views on Making Payments Ubiquitous?

By Anand Sahasranaman, IFMR Finance Foundation

This post is a follow-up to our earlier post where we had invited public comments on Local Financial Institutions. In this post we seek your thoughts on the theme of Payments.

Making access to formal payments infrastructure universal is a key component of the overall vision of financial inclusion and the RBI vision document on payments correctly aims towards an economy that is eventually entirely cash less. The payment infrastructure in India currently consists of bank branches, post offices, Business Correspondents, ATMs and Point-of-Sale (POS) machines. A number of measures have been taken in recent years by RBI including the creation of payment infrastructure such as National Electronic Clearance Service (NECS), National Electronic Funds Transfer (NEFT), Real-Time Gross Settlement (RTGS) and Immediate Payment Service (IMPS), permission for non-banks to operate White Label ATMs (WLAs), and guidelines for Pre-paid Instruments and Mobile Banking. As India moves towards ubiquity of payments, there are many important questions around costs, technology, authentication mechanisms and interoperability that need to be answered.

To view the questions and share your thoughts on this theme please click here.