The crux of the financial sector reforms in recent years
in India, as per the statements of the central bank, has
been to develop financial markets by getting rid of struc-
tural barriers, de-regulating interest rates, encouraging
competition and introducing new instruments, organiza-
tions and networks. The banking system in the country
has gradually been goaded towards market-led business
and regulatory models, particularly since the 1990s.
The
Reports of the Banking Sector Reforms Committee
(1997–98) ushered this shift by recommending greater
market orientation of banks and urging them enhance
their competitive efficiency, productivity and quality
and range of services. Through the years that followed
there has been a gradual movement towards aligning
the much talked about developmental mandate of the
Indian banking system with the global financial market
imperatives aided largely with the help of technology.
The estimates of financial market deepening, reportedly,
show a steady rise since the 1970s, a process to which
the banking sector seems to have made significant con-
tributions.
1
The future reforms, it is indicated, will also
be anchored around broadening and deepening financial
markets and creating a competitive and differentiated
banking structure. Interestingly, financial inclusion has
been coopted into the larger initiatives as a major ‘pillar’
of such financial sector reforms (Mohanty 2014, Rajan
2014). The policy statements from RBI with a bearing
on inclusion testify to the intention of the regulator to
further the process of market-based financial inclusion
by ‘enlisting competitive forces to compete for the bot-
tom of the pyramid’s business’ (Rajan 2014). Financial
inclusion clearly has emerged as a ‘peg to hang’ an ambi-
tious agenda of reforms in the financial sector (Sriram,
2014).
The pace of efforts to further financial inclusion has
accelerated since the late 2000s, especially since March
2013, thanks to a few important policy directives from
the RBI and the increased accent by the central govern-
ment on extending banking coverage to spatially reach
out to un-banked and under-banked sections of popula-
tion. The Union budget 2013–14 paved the way for a few
important initiatives to extend financial inclusion such as
the setting up the first women’s bank in the public sector,
extending the coverage of the Rashtriya Swasthya Bima
Yojana (RSBY), the national health insurance scheme,
to rickshaw-pullers, rag pickers, mine workers, sanita-
tion workers and autorickshaw/ drivers and taxi drivers,
making interest subvention scheme applicable to private
5
Inclusive Financing
Policy Directon and Future Prospects
