Microfinance and Subprime Crisis.

Subprime Loans and Indian Rural Banking

Majority of illiterates live in rural India. Illiterates are more vulnerable to exploitation.

 There are certain systemic exploitations which are being done in the name of socially useful schemes. Insurance is one such business, which is selling so many schemes to non-deserving vulnerable persons.

Banking and microfinance are good ideas to cover the remote areas of rural India. The objectives of this initiative are non-controversially good. Every body should have a reach to banking, no doubt about that.

Banking, as a commercial viability in rural area or for population of two thousand is a very dangerous proposal. This should be viewed in light of US economy which is seeing banking insolvency at a very large scale. The sub prime crisis in US has retracted US economy many step backward. This could happen in US which has far higher literacy rates than India.

To make a branch viable in rural area, is likely to increase the dirty tricks and frauds in this trade. Selling the exploiting insurance products, keeping large balances in saving accounts, advancing loans on mortgaging the property of rural people and then exploiting them through bribery, threats and clerical frauds, are likely dangers of this scheme. Banking insolvency and accounting anomalies will cheat the people and are likely to work as impending drains on tax-payers money in probable problems.

Companies interested in opening branches in rural area should be thoroughly screened. Many of the co-operative banks operating in rural areas have seen massive frauds.

It is already becoming a popular vote purchasing route for the ruling parties. People have stopped paying loans in the hope of ultimately getting these written of. Banking loan is currently viewed as money distribution by politicians.

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5 Responses so far »

  1. 1

    In my knowledge of financial management,I can say let the people be first educated in institutional finance,insurance and banking transactions before they become customers.

  2. 2

    Thanks Dr. Panda for expressing similar feelings.
    I always find illitates at the receiving end of corrupt employees.
    Banking should first be preceded by education.
    It was indeed a great service to arrange a blood donation camp at your end.
    Great senior citzensip indeed.
    Keep it up. It is real happiness and harmony with God.
    It was nice to see you enjoying life with Sara in her innocent age.
    I owe a lot of happiness to her.
    Dr. Madan Goyal

  3. 3

    Jingle said,

    http://jingleyanqiu.wordpress.com/happy-2nd-birthday-2-nohas-twin-babies/

    help visit a long time Poets Rally member celebrate her twin babies’ birthday today,
    all the best!
    🙂
    Thank you in advance!
    Cheers!

  4. 5

    Comments in TOI on above mentioned article

    Dr. Madan Goyal (India)
    17 Aug, 2010 04:03 PM

    Majority of illiterates live in rural India. Illiterates are more vulnerable to exploitation. Banking and microfinance are good ideas to cover the remote areas of rural India. The objectives of this initiative are non-controversially good. Every body should have a reach to banking, no doubt about that. Banking, as a commercial viability in rural area or for population of two thousand is a very unlikely. This should be viewed in light of US economy which is seeing banking insolvency at a very large scale. The sub prime crisis in US has retracted US economy many step backward. This could happen in US which has far higher literacy rates than India. To make a branch viable in rural area is likely to have more irregularities. People have stopped paying loans in the hope of ultimately getting it written of. Banking loan is currently viewed as aid to the poor.


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