The Hindu Business Line : Social banking

This refers to the article "Social banking critical to take credit to the poor" (Business Line, February 3). In India, social banking has been in existence in the form of co-operative banking.

For over 40 years after Independence, the segment was abuzz with activity but progressively failed due to political/bureaucratic reasons and corruption in the system.

This is at a time when reforms are said to be on the fast track.

The result has been that private micro-financial institutions have largely replaced the role of co-operative banks, and charge high interest rates, with the resulting farmer indebtedness and cases of suicides in case of crop failure and poor marketing opportunities.

It is only through co-operative banking that we can achieve the goal of inclusive banking, backed by such entities as Nabard and NGOs working area-wise.

The responsibility of crop insurance may also be entrusted to the co-operative banks.

The success story of Mr Muhammad Yunus, the Nobel Prize Winner from Bangladesh, should be proof beyond doubt of the effectiveness of micro-finance and the co-operative initiative.

K. V. S. Gopal Rao

Kirandul

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