BASIX, the Indian replicator of Nobel laureate’s principles, (though with a distinct methodology of livelihood advertisement), had ascertained itself as an efficient microfinance institution (MFI) in India. It had successfully convinced the government of the demand for, and feasibility of, setting up financial institutions for example "local banks" in rural areas to mobilize rural savings and provide meaningful livelihoods for the poor, especially women.
The guidelines provided by Reserve Bank of India for the commercial banks were consistent for the commercial banks as well as the Neighborhood Area Banks in several aspects such as the statutory liquidity ratio and the money reserve ratio requirements. Nevertheless, the geographic restrictions on the local area banks were making it almost impossible to grow and fulfill the compliance and monitoring mechanisms. The case examines the journey of the original microfinance banking institution above a decade of its own existence and considers its future. It raises questions about what actually harasses local place banks in general and KBS specifically, the justifiability of the RBI guidelines and the viability of microcredit banks later on.
PUBLICATION DATE: June 30, 2013 PRODUCT #: ISB018-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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