Reforms in Institutional Finance for Inclusive Growth

16 Pages Posted: 6 Sep 2014

Date Written: September 4, 2014


This paper analyses the need, significance and the advantages of ‘reforms in institutional finance for inclusive growth’ in the context of Indian economy and offers some practicable suggestions from the functional perspective. India’s Rural Financial Architecture (RFA) is subject to systemic policy issues and pervasive institutional weaknesses. Lack of autonomy and weak governance and unseen accountability have affected the sustainability of Rural Financial Institutions (RFI) and resulted in constrained outreach. Importance of access to institutional finance for the poor arises from the problem of financial exclusion of nearly 3 billion people from the formal financial services across the world. With only 34% of population engaged in formal banking, this paper argues that the reforms in institutional finance coupled with governance reforms in India’s RFA would greatly benefit the economy in making available the much-needed financial services to the poor and the neglected sections of the society and facilitate the efforts towards achieving inclusive growth.

Keywords: Development finance; Financial system; Rural financial institutions; Poverty; Governance; Reforms

JEL Classification: D53, G2, G21, G28, O16, O43, P21, Q14

Suggested Citation

P.M., Vighneswara Swamy, Reforms in Institutional Finance for Inclusive Growth (September 4, 2014). Available at SSRN: or

Vighneswara Swamy P.M. (Contact Author)

IBS-Hyderabad ( email )

62, Nagarjuna Hill
Hyderabad, TX AP 501504

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