Restructuring Rural Financial Institutions
This paper first identifies major proposals being considered now for restructuring rural financial institutions (RFIs). It then discusses main reasons which may have prompted these proposals. These are (1) inefficiencies of multi-agency approach, (2) dependency of RFIs, (3) autonomy of RFIs (in regard to reserve requirements, priority sector lending, loan appraisal, monitoring and recovery, and interest rates), and (4) explicit and implicit viability of RFIs. Various proposals are evaluated to find out whether they are suitable or not and if not, what alternatives are required to tackle the problems of RFIs. Based on this the paper shows that neither the upward revision in lending rates nor these restructuring proposals are required for improving viability of RFIs. An alternative proposal of restructuring RFIs is then suggested. This proposal discusses six strategic organizational principles of developing RFIs. These are (1) encouraging multiple institutions, (2) promoting appropriate forms of organization, (3) achieving vertically integrated organizational structure, (4) developing suitable density of field-offices, (5) enlarging reach or coverage of rural clients, and (6) accelerating diversified and multiple functions. Both systemic and procedural macro and micro innovations that stress the process aspect of institutional development are outlined. This restructuring proposal emphasizes the mission of decentralized institutional development of RFIs. Its vision is diversified, multiple and joint-products oriented rural banking that is autonomous but accountable. And it has a potential to make RFIs more viable and agricultural and rural growth-oriented.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Phone: 91 79 2630 7241|
Fax: 91 79 2630 6896
Web page: http://www.iimahd.ernet.in/publications
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:iim:iimawp:wp01275. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.