This refers to the editorial "Differentiating to include" (July 21). Commercial banks in India have not been effective in serving our banking needs. If you visit a bank with small denomination currency notes or to exchange a damaged currency note, the experience is not encouraging. Banks are even reluctant to dispense small denomination notes and coins. For traders, handling a large volume of small denominations received during the course of their business continues to be a problem. Thus, a large pool of small sums of money remains outside the banking system, leading to opportunity loss for the economy. Small area banks would be more vulnerable to local vested political interests.
Banking, a risk-taking business with a licence to leverage public funds, is vulnerable because of the absence of an effective risk-management system and quality governance. The Reserve Bank of India should, therefore, ensure that the differentiated/local banks do not replicate the experience of the urban and central co-operative banks.
Biplab Chakraborty Kolkata
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