Reading through an article in the Economist which talks about how local, smaller, geographically spread banks serve populations better than large conglomerated banks -
"Governments in low-income countries should recognise the strategic importance of small, private domestic banks. They should also carry out some fundamental reforms. On the demand side of the equation, entrepreneurs in developing economies need to be able to signal more easily that they are creditworthy. Sustained efforts to improve credit and collateral registries offer large pay-offs. Credit registries enable first-time entrepreneurs to document their personal credit histories and share them with lenders. Collateral registries enable lenders to verify that assets such as property and vehicles have not already been pledged by the borrower to secure past loans. Transparent and efficient court procedures allow lenders to seize collateral in the event of loan defaults. "
Really vouch for the second item on the list. Being able to show your credit worthiness is such an important part of the whole equation for that small farmer in rayalseema...What the article seems to miss is the whole online nature of banking transactions these days as it cites historical examples to support these points. But then again the spread and degree of comfort with online/mobile banking are entirely different matters where again the authors theory would stand ground...
Story-Link-http://www.economist.com/businessfinance/displaystory.cfm?story_id=13986299
"Governments in low-income countries should recognise the strategic importance of small, private domestic banks. They should also carry out some fundamental reforms. On the demand side of the equation, entrepreneurs in developing economies need to be able to signal more easily that they are creditworthy. Sustained efforts to improve credit and collateral registries offer large pay-offs. Credit registries enable first-time entrepreneurs to document their personal credit histories and share them with lenders. Collateral registries enable lenders to verify that assets such as property and vehicles have not already been pledged by the borrower to secure past loans. Transparent and efficient court procedures allow lenders to seize collateral in the event of loan defaults. "
Really vouch for the second item on the list. Being able to show your credit worthiness is such an important part of the whole equation for that small farmer in rayalseema...What the article seems to miss is the whole online nature of banking transactions these days as it cites historical examples to support these points. But then again the spread and degree of comfort with online/mobile banking are entirely different matters where again the authors theory would stand ground...
Story-Link-http://www.economist.com/businessfinance/displaystory.cfm?story_id=13986299
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