It is a well-known fact that
broad-based access to formal
financial services is a prerequisite to attain high GDP and
economic development. Yet, only a limited initiatives have been taken
in this direction. The problem is not specific to
India and many countries too have been groping for the inflexion point in finding
solution to this problem. At the macro level, it is only in the
recent past that this area has started witnessing the
academic rigor of the scale in mainstream finance and
this could be due to inherent nature of the issues
which we are grappling with. Most of the initiatives have
been within the framework solutions that have inherent
limitations. This point comes out all the more starkly in the context of the
explosion in financial innovations and products witnessed in
mainstream finance.
Moreover, it would be interesting to look at the evolution of
the discipline of finance, in general, and banking, in particular.
Until a few decades back, the field of finance itself was in a sense
the domain of economics and it was only the revolutionary ideas
and theories relating to asset pricing, particularly traded stocks to
begin with, that changed the landscape. The subsequent
academic contributions in the area of option pricing triggered the revolution
in derivatives which has, in effect, commoditized the financing
needs as well as options available to a certain segment of the
corporate and retail sectors. The above advances in the field of finance
have evolved in response to a given set of circumstances in
industrial economies and the applications designed around these were
aimed at a particular target group. Most of the principles have
gradually found wide acceptance and have been imbibed across the globe,
including India. However, the needs of a complex country like India are
different and to find a universal solution can be
a real challenge, particularly in fostering a
financially inclusive growth. |
