Growth in Shadow banking with reference to Greater Mumbai
Dr.Sanoj Kumar , Dr.Shrikesh Poojari
The Anomalies of operating in a complex and unorganized and under developed credit system remains a challenge to many financial institutions in a developing country especially a country like India.Being a country with more than 6 lakhs plus villages, the penetration of a bank in these villages is very meager up to the tune of about 10% only.Like what was started in the developed economies. In India too, the initial focus was to make the commercial banks to include the portfolio of these non customers and bringing them in to the mainstream financial service sector.The simplest reason which attributed to the failure of the commercial banks is the demographics of the employees of the bank with reference to their existing customer demographics and the demographics of the new segment of rural and low income customers. Then came the new idea of “Financial Inclusion” spearheaded by current government in Power which aimed at reducing he gap being under-privileged citizens and others by bringing them in to banking system to provide them security as well as making all the transactions as accountable. Many commercial banks joined the bandwagon of financial inclusion and started opening ‘no-frills’ accounts for new customers who did not have the usual documents which were required to open a bank account and were not able to maintain the minimum balance. Even though during the initial days there was much ‘hype’ around these initiatives but end of the day the results are not something which could be boasted as an achievement in itself. Out of the 74 million accounts reportedly opened in the initial reports, the average number of active accounts stood at a pathetic 3 to 20% which means that the system has not been able to derive the intended benefits.This leads in to a totally new alternate system which can cater specifically to the new segments which has to be included so that the segment gets due attention and efforts. The concept of shadow banking which holds relevance in the developed world comes as an amicable solution to many of the problems being faced by financial service industry in a complex scenario as such as prevalent in India.
Article Details
Unique Paper ID: 157469

Publication Volume & Issue: Volume 9, Issue 7

Page(s): 204 - 215
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