Template-type: ReDIF-Paper 1.0
Author-Name: Sonne, Lina
Author-Email: sonne@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: India’s Rural Financial System: Does it Support Pro-Poor Innovation?
Abstract: 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.
Classification-JEL: G21, O16, O31, R51
Keywords: Pro-poor finance, finance innovation, finance entrepreneurship,
	 financial innovation, rural finance, India, India’s financial system.
Series: UNU-MERIT Working Papers
Creation-Date: 2010
Number: 2010-039
File-URL: https://unu-merit.nl/publications/wppdf/2010/wp2010-039.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2010039