Thursday, July 29, 2010

MFIs can't bring about financial inclusion: Chakrabarty

As published in ECONOMIC TIMES ON 3 Jun 2010

Microfinance institutions will not be able to bring financial inclusion. Their cost of lending is high, Reserve Bank of India Deputy Governor K C Chakrabarty told reporters here on the sidelines of the inauguration of Bank of India's mobile-based remittance facility for urban financial inclusion.

"The definition of financial inclusion is providing access to appropriate financial products and services to the most vulnerable group of the society in a fair, transparent and cost-effective manner by the mainstream financial institutions," he said.

When banks reach that level, the competition will bring down the cost, he said.

"When financial inclusion happens, banks will replace microfinance institutions. Then microfinance institutions will take the role of money lenders," he said.


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