ABSTRACT
This chapter talks about how the inclusive finance segment could meaningfully engage with markets and how they could deal with the limitations that the market-based solutions provide. It puts the RBI in a frame where it needs to balance out profit-making agenda of market-based institutions, the need for developmental interventions and how it should be structured. While arguing for a big role for the RBI to mandate certain types of lending and certain types of services, it appears that the time has also come to allow innovations and technology to discover effective ways of delivering the services to the poor. Unlike past approaches which created institutions driven and owned by the state, the chapter argues that in the current context there is need for creating differentiated policy architecture for promoting a diverse range of institutions in the private sector.
The chapter also clearly articulates the importance for a centralised regulatory architecture in areas where the federal government has a power and for a well-calibrated co-ordination mechanism at the local level to ensure that consumer protection issues are not compromised.
