Working Paper #2010-039
India’s Rural Financial System: Does it Support Pro-Poor Innovation?
From the perspective of poverty alleviation, socially relevant, or
pro-poor, rural innovation is of particular interest in a country like
India since it is in rural areas that most of the poor live. Pro-poor
innovation in rural areas is more likely to occur through small-scale
ventures and entrepreneurs than industrial research and development. The
Indian banking system does not efficiently support such rural pro-poor
entrepreneur-based innovation. Instead a pioneering alternative
financing sector has been emerging recently. There are three broad
categories of organisations in this sector: grassroots innovators and
incubators, micro venture capital firms, and small-scale financiers
beyond microfinance. This paper considers why the core of India’s
financial system, its banking sector, does not support rural
entrepreneur-based innovation. It ends by discussing the emerging
alternative financing sector at the periphery which on the other hand
appears able to do so.
- Keywords
-
- Pro-poor finance
- finance innovation
- finance entrepreneurship
- financial innovation
- rural finance
- India
- India’s financial system
- JEL codes
-
- G21
- O16
- O31
- R51
- UNU-MERIT
- Working
- Papers
- ISSN
- 1871-9872
Cite this as
APA 7th ed.Sonne, L. (2010). India’s Rural Financial System: Does it Support Pro-Poor Innovation? (UNU-MERIT Working Paper No. 2010-039). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=3979