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Lalitagauri Kulkarni · Vasant Chintaman Joshi
Inclusive Banking
In India
Re-imagining The Bank
Business Model
Inclusive Banking In India
Lalitagauri Kulkarni · Vasant Chintaman Joshi
Inclusive Banking In
India
Re-imagining The Bank Business Model
Lalitagauri Kulkarni Vasant Chintaman Joshi
Gokhale Institute of Politics and Bank of India
Economics Mumbai, Maharashtra, India
Mumbai, Maharashtra, India
ISBN 978-981-33-6796-8 ISBN 978-981-33-6797-5 (eBook)

https://doi.org/10.1007/978-981-33-6797-5
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Singapore Pte Ltd. 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and
retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc.
in this publication does not imply, even in the absence of a specific statement, that such
names are exempt from the relevant protective laws and regulations and therefore free for
general use.
The publisher, the authors and the editors are safe to assume that the advice and informa-
tion in this book are believed to be true and accurate at the date of publication. Neither
the publisher nor the authors or the editors give a warranty, expressed or implied, with
respect to the material contained herein or for any errors or omissions that may have been
made. The publisher remains neutral with regard to jurisdictional claims in published maps
and institutional affiliations.
This Palgrave Macmillan imprint is published by the registered company Springer Nature
Singapore Pte Ltd.
The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore
189721, Singapore
To my parents
Mr. Rajendra Banhatti and Dr.Mrs. Vasundhara Banhatti
— Lalitagauri Kulkarni
To the bank personnel for continuing to serve the public

and keeping the flag flying during the worst of times…
—Vasant Chintaman Joshi & Lalitagauri Kulkarni
Preface
In the vast pool of literature on financial inclusion, there exist very few
books dealing exclusively with this subject. This book proposes that the
narrative of inclusive finance must change. Inclusive finance is not a priv-
ilege to be ‘given to the poor’. It is their right to be included in the
system. In India, the vast segment of population that is thus far unbanked
and deprived is pigeon-holed at the bottom of the pyramid. We contend
that this perception of describing the poor as the bottom of a hierar-
chical structure must change. The prevalent system of financial institu-
tions should perceive them not as the bottom of the pyramid but as the
bulk of the population.
The primary focus of the book is on how banks can cater to this silent
majority. Banks need to make changes to their business model to use
financial technology and undertake the work of microfinancing directly
instead of outsourcing it. This idea is the central theme of our conceptual
framework. Thus, the discussion is purposefully kept limited to inclusive
banking implying bank account ownership and microlending, payments
and money transfer, and does not extend to broader areas of financial
inclusion like microinsurance.
The first chapter of the book discusses how inclusive finance has
become indispensable in the present times when the volatility in the finan-
cial sector has turned into an abysmal fear of the future of the economies.
Global pandemic has shown the world how the vulnerability and helpless-
ness of the poor are a ticking time-bomb on which elitist systems stand.
vii
viii PREFACE
If left unaddressed, this can turn the entire socio-economic and political
system upside down. The chapter gives an overview of the concept and
scope of inclusive banking, its evolution through various initiatives and
the current policy stance on it.
A major portion of the literature on financial inclusion consists of
empirical studies establishing the relation between inclusive finance and
economic growth. Theorizing this relationship is essential as it helps to
establish the general applicability and predictability of this nexus between
inclusive finance and economic growth. Chapter 2 delves into the discus-
sion of finance and financial inclusion in the framework of economic
theory. It deliberates on the justification of banking for the poor from
the perspectives of economic theory.
The ideological problem of whether banks should act as commercial
profit maximizing institutions or should meet the needs of the society is
discussed in Chapter 3. It provides an overview of the current trends in
microlending by commercial banks and the issues and challenges faced
by them in implementing the policy of financial inclusion to achieve the
social goals.
Chapter 4 argues that the dependency of the non-bank microfinance
sector, on the banks raises important questions. The fact that the NBFC
microfinance is for profit, is not lending at the rates cheaper than the
mainstream system and is vulnerable to shocks leads one to explore better
alternative in the mainstream bank lending.
A bank may choose to enter the microfinance market directly, rather
than through partnership with MFIs. For the success of inclusive finance,
banks need to treat low-income segment as the core business rather than
as an unwanted responsibility. Banks have a comparative advantage over
the microfinance institutions. Shocks to the economy like COVID-19
pandemic prove that the microfinance institutions have limitations and the
financial inclusion ecosystem cannot successfully and effectively achieve its
goals without a more dynamic approach by banks.
Many studies confirm that escape from poverty through participation
in microfinance is slow and uncertain. Chapter 5 delves into the political
economy of inclusive finance. The political economy approach points out
that the banking framework depends on the ideology of the state. Polit-
ical pressures, lobbies and interest groups undermine the implementation
of best practices. This has been experienced by the breach of lending
practices and frauds in many countries including India.
PREFACE ix
Chapter 6 reviews the role of government schemes and reflects that

the outcomes of financial inclusion initiatives are less than expected. The
return on investment on all these initiatives has been negligible, taking
into account the system costs. Many a time, the priority sector loans are
given only to meet the targets. However, just an increase in the number
of accounts and amounts of microloans does not make a difference in the
lives of excluded persons. One cannot expect a poor individual to become
an entrepreneur overnight and be successful in his microenterprise.
Chapter 7 discusses four evolving developments in the social and inclu-
sive finance sector in India, viz. (i) digital revolution in inclusive finance
sector, (ii) launching social stock exchange, (iii) microenterprise collabora-
tives and (iv) MFIs converted into banks and small finance banks. These
developments may result in reducing costs and make inclusive banking
viable. For instance, digital lending results in reduction in the cost of
lending and consequently lending rates. Similarly, the development of
social stock exchange can be expected to lessen the banks’ burden of
financing MFIs and NGOs and the banks can be free to independently
forge into the microlending arena.
Chapter 8 presents a new business model for banks that proposes they
should nurture the poor as their core client base. This should lead to
a long-term relationship not restricted to borrowing. We postulate that
the proposed business model would be financially viable with the newer
avenues of cost reduction, digital lending, lean banking and advanced
technology.
Finally, for successful inclusive banking, in addition to the accessible
branch offices and convenient products, what is important is treating the
customers with respect. Inclusion will be achieved only when the bank
account operations are simple in local language and the bankers ensure
that customers do not feel embarrassed by their lack of skills and educa-
tion. From the bankers’ viewpoint, they will be motivated to achieve this
only when they stop thinking that these accounts are externally imposed.
They need to be convinced that these accounts are viable and can be oper-
ated as regular accounts. The proposed model is an attempt to provide a
roadmap for the inclusive banking policy in India.
Mumbai, India Lalitagauri Kulkarni

Vasant Chintaman Joshi
Acknowledgements
We would like to express our gratitude to Prof. Abhijit Banerjee for his
encouraging comments at the time of the release of this book at the
convocation ceremony of Gokhale Institute of Politics and Economics.
The present work is a culmination of our discussions with experts in
the microfinance industry, interactions with bankers and field surveys of
microlending institutions, self-help groups and entrepreneurial collabo-
ratives throughout Maharashtra and southern parts of India. We thank
Dr. Aloysius Fernandez, Dr. Madhura Chatrapathy, Dr. Medha Samant,
Mr. G. Nagaraj and many others involved in microlending field for their
valuable comments and support for the field surveys.
We are also grateful to the beneficiaries of the self-help groups,
women’s collaboratives and slum dwellers of Pune who gave us an oppor-
tunity to talk with them to have an idea of their perceptions, outlook and
aspirations regarding their finances.
We are thankful to Prof. Rajas Parchure, RBI Chair Professor and
Director of Gokhale Institute for the valuable comments on the devel-
opment of the financial component of the new bank business model.
Gokhale Institute of Politics and Economics, Pune, provided us access
to its library and infrastructure for the underlying study for this book.
We express our gratitude to the editors of Palgrave Macmillan Pvt.
Ltd. and Springer Nature for standing by us throughout the process of
finalizing the book. Without their support, the book would not have seen
the light of day within the stipulated time frame.
xi
xii ACKNOWLEDGEMENTS
All the while we counted upon the cheerful support of our family
members.
Kirti, Achala and Sameer Deshpande actively contributed to the tedious
task of formatting and editing the manuscript. Special thanks are due to
Ranjit and Kimaya Kulkarni for their unconditional support and candid
comments on the manuscript.
Contents
1 Inclusive Banking—Concept and Context 1

2 Inclusive Finance and Economic Growth: The
Theoretical Underpinnings 29
3 Inclusive Finance and Commercial Banks 51
4 The Non-Bank Sources of MicroLending in India 77
5 Inclusive Banking: A Political Economy Approach 99
6 Role of Government in Inclusive Banking in India 119
7 New Developments in Inclusive Finance 133
8 Reimagining the Banking Business Model 155
Index 187
xiii
List of Figures
Fig. 1.1 Status of Financial Inclusion in India (Source: Trends

and Progress of Banking in India, 2018–19, p. 64, The
Global Findex Data, 2017) 7
Fig. 1.2 India’s Poverty Pyramid (Source Prepared by the authors
based on Poverty and Equity Brief [World Bank, April
2020]) 9
Fig. 1.3 Household access to financial services (Source India
Incomes and Savings Survey, IISS, 2007) 13
Fig. 1.4 Chronology of committees on financial inclusion in India
(Source Compiled by the authors) 14
Fig. 1.5 Chronology of RBI Initiatives for Inclusive Banking
Fig. 1.6 Progress of inclusive banking in India—Selected
parameters (Source Compiled by the authors
from the RBI, STRBI and the World Bank database) 22
Fig. 2.1 Taxonomy of theoretical underpinnings of inclusive
finance (Source Prepared by the authors) 33
Fig. 2.2 Theory of microfinance—a melange of theory, practice
and policy (Source Prepared by the authors) 45
Fig. 3.1 Theory of change illustration (Source Prepared
by the authors) 54
Fig. 3.2 Obstacles for commercial banks in microfinance (Source
Prepared by the authors) 56
Fig. 3.3 Strategies used by banks to enter the microfinance
marketspace (Source Prepared by the authors) 61
xv
xvi LIST OF FIGURES
Fig. 3.4 Composition of microcredit by lender institutions (Source

Bharat Microfinance Report, 2019, p. 68) 64
Fig. 3.5 Number of ATMs per 1,00,000 adults (Source Compiled
by the authors based on Financial Access Survey, IMF) 65
Fig. 3.6 Number of banking outlets per 1,00,000 adults (Source
RBI, Statistical Tables Related to Banks in India) 65
Fig. 3.7 Percentage of adults with savings account (Source RBI,
Statistical tables related to banks in India) 66
Fig. 3.8 Number of banking outlets in villages, 2011–2018
(Source RBI, Statistical tables related to banks in India) 68
Fig. 3.9 Percentage change in number of banking outlets
in villages, 2011–2018 (Source RBI, Statistical Tables
Related to Banks in India) 68
Fig. 3.10 State wise number of ATMs per 1,00,000 adults (Source
Compiled by the authors based on World Bank data,
2019) 69
Fig. 3.11 State-wise number of bank offices per 1,00,000 adults
(Source Compiled by the authors based on World Bank
data, 2019) 70
Fig. 3.12 State-wise percentage of adults with saving bank accounts
(Source Compiled by authors, based on The Global
Findex Data, 2017) 71
Fig. 4.1 Taxonomy of non-bank microfinance institutions
in formal sector (Source Compiled by the authors) 79
Fig. 4.2 Growth in number of MFIs in India (Source: Bharat
Microfinance Report, 2008–2010) 81
Fig. 4.3 Deposits in microfinance institutions in India (Source
Based on MIX Market, Database, The World Bank,
www.databank.worldbank.org) 82
Fig. 4.4 Credit Advanced by Microfinance Institutions in India
(Source Based on MIX Market, Database, The World
Bank, www.databank.worldbank.org) 82
Fig. 4.5 Delinquency by days past dues (Source Bharat
Microfinance Report, 2019, p. 70) 83
Fig. 4.6 Loan portfolios-microfinance industry snapshot (Source
Bharat Microfinance Report, 2019, pp. 66, 68 & 75) 84
Fig. 4.7 Loans to MFIs by banks (Source Based on Annual Reports,
2009–10 to 2018–19 NABARD, www.nabard.org) 94
Fig. 5.1 Political Economy Approaches to Financial Inclusion
Fig. 5.2 Demand for Microfinance in a Competitive Market
LIST OF FIGURES xvii
Fig. 5.3 Structure of Microlending Sector in India (Source

Compiled by the authors) 108
Fig. 5.4 State-wise Portfolio of Microfinance Institutions in Top
10 States (Source Derived from Bharat Microfinance
Report, 2019, p. 22) 111
Fig. 6.1 Phases of Government Policy on Inclusive Finance
in India (Source Based on Chakrabarty, 2009) 121
Fig. 7.1 Impediments to bank account ownership and possible
measure (Source Compiled by the authors) 135
Fig. 7.2 Structure of educate girls social impact bond (Source
Instiglio, May 2015) 136
Fig. 8.1 Inclusive finance by banks’ direct/indirect funding
(Source Indicative illustration by authors) 158
Fig. 8.2 Stagnant priority sector lending (Source Based
on statistical tables related to Banks in India, RBI
Database) 159
Fig. 8.3 Net Interest Margin, 2010 to 2019 (Source Reports
of trends and progress of banking in India, 2009–2010
to 2018–2019. Reserve Bank of India, www.rbi.org.in) 160
Fig. 8.4 Revenue Mix of Commercial Banks—2019 (Source
Based on Earnings and expenses of scheduled commercial
banks, 2019, Reserve Bank of India. Retrieved from:
www.rbi.org.in) 161
Fig. 8.5 Provision of coverage ratio and operating profits: public
vs. private sector banks (Source Calculated from Earnings
and expenses of scheduled commercial banks, 2019. Reserve
Bank of India www.rbi.org.in) 162
Fig. 8.6 Changing the narrative (Source Adapted from Prahalad,
2005) 165
Fig. 8.7 Comparing blue oceans with red oceans (Source Compiled
by the authors based on www.blueoceanstrategy.com) 166
Fig. 8.8 Serving the bulk of the population (Source The authors) 168
Fig. 8.9 Components of business model (Source Illustration
by the authors based on Osterwalder & Pigneur, 2010) 169
List of Tables
Table 1.1 Barriers to financial inclusion 10

Table 3.1 Indicators of financial inclusion—global comparison 67
Table 4.1 State-wise percentage of SHGs having bank accounts,
2019 90
Table 8.1 Simple model of Sabka Sath financial viability 178
Table 8.2 Profit and loss account of regular segment and BoP
segment of a bank 179
xix
CHAPTER 1
Inclusive Banking—Concept and Context
Background
This book on inclusive banking is being published at a time when the age-
old pandemic of poverty has been agonizingly intensified by the vagaries
of the novel virus. In countries like India, this crisis has brought into focus
the glaring gaps in governance and lack of resilience of the existing system
to handle such shocks on a large scale. The UNCTAD Report (2020)
projects that 120 million people will be pushed into extreme poverty
in the developing world, with close to 300 million facing food insecu-
rity. India with its dense population is caught between the pandemic and
poverty. The report projected that the Indian economy will contract by
5.9% in 2020.
Behind the dry statistics are crores of informal sector workers grap-
pling with the worry of feeding their families. The worst part is that the
epidemic has crushed the aspirations of many in the informal sector at
the margins who have lost their sundry jobs and other sources of earning.
Their optimism is tainted and they are now questioning the prospect of
ever coming out of the poverty!
Financial inclusion plays a crucial role during such challenging times.
Microlending and insurance have a potential to safeguard the poor from
being pushed to below the subsistence levels of living. The microfi-
nance sector globally is facing financial problems because of disruptions
in economic activities of the beneficiary members owing to the pandemic.
© The Author(s), under exclusive license to Springer Nature 1

Singapore Pte Ltd. 2021
L. Kulkarni and V. C. Joshi, Inclusive Banking In India,
https://doi.org/10.1007/978-981-33-6797-5_1
2 L. KULKARNI AND V. C. JOSHI
Banks are an important link to transfer the governmental benefits

to the poor. Governments and central banks are making all-out efforts
to reduce the sufferings of those afflicted by the pandemic. Govern-
ments all over the world have announced fiscal stimulus in the form of
cash benefit transfers to help vulnerable groups severely affected by the
pandemic. In India, the direct benefit transfer schemes of the govern-
ment have helped the poor through direct transfer of cash in their PM
Jan Dhan Yojana (PMJDY) accounts. The government’s stimulus revived
many of the unused idle PMJDY accounts in India. The crisis underlined
the importance of banking access and those who never operated a bank
account also realized its importance. The direct benefit transfers during
the crisis times made the marginalized, unbanked people aware of the
need of participating in the formal system by opening a bank account.
However, banks do not have any special scheme or model for these times.
As the banks did not have any alternative model, the reliance on informal
sector for borrowing has increased.
According to the Microfinance Network (MFIN) Report (July 2020),
the loans disbursed by MFIs during the first quarter of 2020 are lower
by a whopping 96% as compared with the last year (The Financial Express
dated September 22, 2020). The pandemic followed by the lockdown
has adversely impacted MSMEs and informal sector enterprises, and thus
the MFI borrower segment. To revive the MFI sector, the government
declared a series of relief measures including loan moratorium. However,
banks are already facing problems and are cautious in extending the
governmental measures and reluctant to dilute the norms because of the
concern for increasing NPAs and weakening the entire system. This catch-
22 problem does not have an instant solution. The book proposes a model
that can be one of the many solutions for this problem.
As a silver lining in this dark situation, the use of UPI, mobile
banking and government emphasis on cashless banking infrastructure
have increased manyfold during the crisis. The outreach of banks and
MFIs has contributed to the use of mobile banking in India, especially by
the younger generation in rural and urban areas. As the volume of busi-
ness increases, banks would have to take advantage of Fintech and resort
to digital lending and even AI at a later date. The banks and financial
sector can take advantage of this increased use of technology and accep-
tance of mobile banking by wider strata of population. By using digital
lending, mobile banking and lean banking can reduce their transaction
costs and increase their outreach.
1 INCLUSIVE BANKING—CONCEPT AND CONTEXT 3
We must realize that the pandemic is one of the many shocks in the
history of an economic system. According to Nassim Taleb (The New
Yorker dated April 21, 2020), these shocks are ‘white swans’ as these kind
of events are not totally unknown and not impossible to happen in human
history. Thus, the system should be ready to handle them in a resilient
manner to prevent lesser damage. Thinkers, policy-makers, governments
and practitioners must work towards building ‘anti-fragile’ systems in each
field including banking. The primary goal of the system should be to
achieve a reasonable degree of resilience so that crises like these do not
rob one of one’s minimum subsistence and dignity.
How can the banking system contribute to build this systemic
resilience? These are times when it is essential for banks to ‘challenge the
conventional wisdom’ (King, 2019) and explore innovative trajectory.
This book is an attempt to advocate one.
Inclusive Banking: An Economist’s Approach

The authors perceive the above issues from an economist’s perspective. It
implies that the banking service is considered as a ‘good’—a commodity
traded in the financial markets with both demand side and supply side
players. Banking as an industry provides this ‘good’. The problem of
providing this service to the poor arises for two reasons. First, banks
as commercial firms operating in the free markets do not cater to poor
customers. In the terminology of economics, the poor do not have effec-
tive demand backed by the purchasing power to avail of this service in the
market. That is, they do not have assets or credit history to support their
need for borrowing. Nor do they have surplus income to save in bank
deposits.
Second, banking as a service is a quasi-social good because it creates
positive externalities: society benefits if the poor can access finance, start
saving and get loans for their enterprises. However, this does not happen
naturally in commercial banking driven by the usual profit motives. The
entire discussion around financial inclusion must revolve around the
economics of financial inclusion.
Need to Redefine the Existing

Model of Inclusive Banking
The narrative of financial inclusion needs a change. The existing dialogue
on financial inclusion in the policy arena and academia abides by the
viewpoint of bankers, regulators and policy-makers who are a part of the
formal financial system. However, when zero balance accounts are opened
but not used (Global Findex Report, 2017), and when more than 40% of
the rural credit is from moneylenders (All-India Debt and Investment
Survey, 2012), problems with this perspective become evident.
During the last few years, bank accounts have remained either inactive
or underutilized because banks have not been motivated to take initia-
tives to implement microfinance schemes. Although they supported this
segment indirectly over the years by financing microfinance institutions,
they have never seriously considered nursing this clientele as their core
customer base.
Those who are currently un-banked/under-utilizing bank accounts
have been excluded because the particular model being followed caters
to a privileged few. Hence, there is a need to redefine the model and
make the entire population included.
A majority of the population is poor and requires microlending. The
formal banking model is inadequate as it serves only a privileged minority.
Hence, it becomes the responsibility of the traditionally formal system
to adapt itself to service the population at large. We must note that the
poor are not devoid of the banking services; rather, the banking system is
devoid of them.
Why, then, do we need a new study on Inclusive Banking?
We see at least two valid reasons. First, in the vast pool of literature
on financial inclusion, there exist few books that deal exclusively with
inclusive banking. Our study aspires to be a comprehensive treatise on the
subject. It discusses the problems of banking for the poor and proposes
a new bank business model. Second, it is essential today for the volatility
that exists in the financial sector has turned into an abysmal fear of the
future of the economies—the future of market economy/capitalism. The
black swan event of the global pandemic has shown the world how the
vulnerability and helplessness of the poor are the ticking time bomb on
which elitist systems stand. If left unaddressed, this can turn the socio-
eco-political system upside down.
In most discussions on financial inclusion, the microfinance sector

is often perceived as an appendage of the mainstream banking system.
Banks’ microfinance activities were reported as mere line items on annual
financial statements. Further, in India, banks did not usually participate
actively in microfinance lending operations.
This book obviously benefits from the previous studies, books and
reports, but its essential postulation is that financing the poor should be
the mainstream financing. The poor ought to be perceived as the ‘regular’
clientele upon which a financially feasible business model is built. In this
endeavour, it addresses the broader spectrum of the entire financial inclu-
sion ecosystem with banking as the underlying core sector for enhancing
financial inclusion in India.
To what extent is the financial inclusion ecosystem successful in
achieving its goal? Which element of this ecosystem is more efficient in
providing access? What are the gaps and challenges that need attention?
What is the role of banks as key stakeholders in this ecosystem? If, even
after more than 50 years of effort at financial inclusion, we are still strug-
gling for basic objectives like increasing the use of bank accounts by the
poor in India and meeting their diverse financial needs, then how should
the policy be reformed?
Post-PMJDY, the banks did not actively pursue to operationalize the
PMJDY accounts. Urjit Patel, a former Governor of Reserve Bank of
India, stated, ‘My view about financial inclusion is probably different from
that of my predecessors. Going forward I see that the market will take
over this agenda through technology and innovation. The role of RBI will
take a backseat’ (Sriram, 2018). As suggested by Patel, after opening of
the no frills accounts, the entire responsibility was left to the market. This
has obviously not worked. The ‘thin’ files of such customers gather dust.
Banks need to be proactive and to encourage these thin-filed customers
to be in the system. It is essential that a special effort be made to get them
in. While a business model ought to have been built earlier, we advocate
remedial measures.
The book tries to offer a comprehensive view of these issues from
perspectives of the stakeholders such that it will be useful to the prac-
titioners, policy-makers and academics involved in the fields of banking,
economics, finance, developmental policy and society. Financial inclusion
is not a standalone policy. It is a part and parcel of the development policy
aimed at alleviating poverty.
Why Are We Still Discussing

Financial Inclusion Today?
At the Micro-level: The Persistence of Gaps in the Access to Banking
Services Along with the Rising Aspirations of People
‘Vahini, I want to buy a scooter so I can go even at a distance and earn
more.’
Surekha, a domestic worker in Pune, tells her employer emphatically.
She is a confident lady living in a pucca hut in one of the sprawling slums
in the elite city of Pune.
A survey of 100 urban slum dwellers conducted by the authors in
Pune showed that 23 of them did not have a bank account for varied
reasons. Some of them lacked the necessary documentation. One slum
dweller said, ‘I don’t need a bank account when I can live easily without
one’. Almost all the members of self-help groups stated that they found
it inconvenient to go to the bank for transactions and preferred to deal
with the group members or relatives for monetary transactions.
When asked why they do not use an online bank account, respondents
said that it was too complicated, too many questions were asked and too
much paper work was involved. Additionally, most of the operations are
in English.
We forget that microlending is not merely a loan disbursement exer-
cise. The level of aspirations of these groups is rising in present times.
Though the loans are largely for consumption, the latter is increasingly
for upward mobility to cross class barriers. Interviews with the clients of
MFIs reflect that they wanted loans in order to get better housing, their
children’s education and better means of communication. The require-
ments of the borrowers are changing. The microfinance borrowers are no
longer limited to small consumption loans. They now demand larger loan
than needed before for small businesses to effect upward mobility. Stal-
wart practitioners in the microfinance industry typically advocate bigger
ticket size lending.
On the other hand, in spite of the fact that MFIs have been working
for 25–30 years, many of their clients are still dependent on them for
solving their existential problems.
At this juncture, one observes a mixed picture regarding the use of
bank accounts and online banking in India. Figure 1.1 shows that the
financial inclusion in India has improved in terms of the number of bank
Fig. 1.1 Status of Financial Inclusion in India (Source: Trends and Progress of
Banking in India, 2018–19, p. 64, The Global Findex Data, 2017)
accounts opened from 2015 to 2017. The official data claims that 40% are
the poorest of the poor in India. Out of them, 77% have a bank account.
Thus, India ranks at the top amongst BRICS countries in this regard. But
one should not ignore the fact that the actual usage of accounts remains
low (Report on Trends and Progress of Banking in India, 2018–19).
Empirical studies on financial inclusion are replete with such cases
showing that bank-led financial inclusion in India has many gaps. If the
financial inclusion were to be successful, it would have considered these
aspirations as well as the needs, and the policy would have been redundant
and we would not have to write about it anymore.
At Macro-level: The Importance of Financial Inclusion for Poverty

Alleviation
Financial inclusion is regarded as a key channel to facilitate equitable
distribution of resources. Finding policy solutions to enable greater
linkage between the untapped potential of informal savings groups and

formal financial institutions could help begin the process of closing the
gap that exists between rapid economic growth in poor countries and
continuing and unacceptable levels of poverty. The developing world is
growing faster than the global average (World Bank, Poverty and Shared
Prosperity, 2018). However, the share of these regions in world poverty
has not decreased. In other words, the fruits of development and growth
are not reaching the masses in these countries.
During the crisis, as the economic growth rates continue dwindling,
and the world faces the fear of recession, the vulnerable populations are
at the risk of becoming poorer and even more deprived. At this stage,
it is also useful to study the demographic changes in those who have
benefitted from microfinance institutions. The concept of the ‘Bottom
of the Pyramid’ was first used by US President Franklin D. Roosevelt in
1932. In economics, this concept implies the poorest of the people in a
country. C. K. Prahalad and Ramaswamy (2004) popularized this concept
when he used it to estimate consumer needs and business opportuni-
ties in poor societies. Various versions of the poverty pyramid are later
used in the literature. One must note that the way of segregating the
population among three classes is not fixed. Many versions of the poverty
pyramid have more classes like the non-poor class and the below subsis-
tence level and above subsistence level class, etc. Figure 1.2 shows the
poverty pyramid based on the 2011 estimates of poverty. For the purpose
of inclusive finance, we can estimate that the banks and financial institu-
tions should be able to cater at least to the population just at the margin
above the subsistence level which is generally engaged in informal sector
and casual employment. These are the people at the margin of poverty
who are financially vulnerable and extreme shocks result in pushing them
below the subsistence level of living. Inclusive banking has a great role to
play in this segment.
The structure of the pyramid depends on the purpose for which it is
used. The population in each level of the pyramid keeps on changing with
the positive or negative shocks to the economy. For instance, after the
pandemic, the economic slowdown and loss of jobs and earnings pushed a
number of people at the margin from non-poor category to the poor cate-
gory, and many from the poor category to the below subsistence level of
living. According to the World Bank’s Poverty and Equity Brief on India
(April 2020), in India 176 million live in acute poverty and COVID-19
induced economic lock down has made the situation even worse. The
High
Income
High Net Worth
Customers
Middle Income
Customers --Regular
Accounts
Low Income-- Non-Poor

Customers- 60% of India's
Popula on in 2011--Includes self-
employed and casual workers
Below Subsistence Level Popula on 21% in

2011 as per oﬃcial es mates of poverty--
es mated to rise post-pandemic
Fig. 1.2 India’s Poverty Pyramid (Source Prepared by the authors based on
Poverty and Equity Brief [World Bank, April 2020])
lock down and the economic slow down that followed have drastically
reduced the incomes of the small business owners and temporary workers
in petty shops, hotels, sundry businesses, etc. Government assistance is
beneficial to only those who are in some way or the other included in the
financial system by way of bank account ownership. Many poorest of the
poor realized that they cannot avail of the governmental benefits as they
have neither an account nor any official identity proof like a ration card
or the Aadhaar card.
Where Does the Need for a Special

Policy for Inclusive Banking Emerge?
The need for inclusive banking emerges from the existence of exclusion in
financial activities. Why does this exclusion arise? The barriers to accessing
finance for the poor are well documented in various reports and studies
(Cull et al., 2012). Table 1.1 lists several demand side and supply side
barriers mentioned in earlier studies (Rajan & Zingales, 2001; Beck et al.,
2006; Dupas et al, 2012; Fuller & Mellor, 2008; Barr, 2004).
Table 1.1 Barriers to financial inclusion
Supply side barriers Demand side barriers
• Lack of understanding or information of • Need for liquidity and cash in hand

using mobile for account operations leading to short-sighted view of
• Gender and age discrimination—research repayment
shows that women and young people are • Lack of awareness
more likely to be excluded than others • Lack of education
• Poor people’s low income and erratic • Low income and no saving capacity
cash flow • Lack of confidence and trust
• Lack of suitable customized and
• Opportunity costs for people to bank
schematic lending from formal financial
with formal financial institutions
service providers that cater to the needs
of poor people • Lack of motivation to deal with
• Proper usage of JAM like initiatives unknown people in formal
(digital lending) to reduce high transaction environment
costs for banks to operate in remote • Inertia to change from conventional
locations as well as high transport and informal sources of credit due to
opportunity costs for people to bank with familiarity and comfort
formal financial institutions • Lack of marketing and bringing out
• National and international policies that features of schemes (like a provision
inhibit financial inclusion of the world’s for refund of interest after mortgaged
poorest people loan is repaid)
Source Compiled by the authors
Table 1.1 lists common barriers across the developing world. In addi-
tion, there can be country-specific socio-cultural barriers like social norms
regarding ownership and use of bank accounts and mobile accounts by
women.
Socio-Cultural Dimensions of Gender Inequality in Financial

Inclusion
In India, we have anecdotal evidence that women often want to keep
their cash with their employers as their bank accounts are generally joint
accounts with their spouses. Women are unsure whether their husbands
will use the money for desirable purposes. In our survey, of slum dwellers
in Pune,1 one woman told us that she does not want the mobile app
1 A field survey of 100 individuals residing in slums in Pune was undertaken by the
authors during May to December 2019 to study the bank account ownership and mobile
banking.
provided by her bank as her husband or son could withdraw from it

without her knowledge.
Can New Models in Inclusive Banking Overcome These Barriers?

International experience shows that these barriers can be overcome
with proper initiatives in inclusive banking. In Kenya and throughout
sub-Saharan Africa, though a strong financial system does not exist,
widespread use of mobile banking has facilitated financial inclusion. Some
experimental initiatives were taken to break the barriers and make the
poor use formal banking system. For instance, the Banking on Change
partnership has reached 513,000 people in the African continent in three
years. According to the report (2013), the estimated 2.5 billion unbanked
people in South Africa can save annually $58 each on an average. Thus,
$145 billion are lost to the economy if these savings are not mobilized.
Banking the unbanked is important not only for the poor but also for the
economy.
These kinds of initiatives should be studied to examine their replica-
bility and scalability across countries. The Fintech revolution has great
potential to overcome these barriers, and by building an extensive Fintech
infrastructure, banks would be able to do away with the conventional
barriers of microfinance.
One of our purposes is to discuss the changes that can be brought
about in the inclusive banking business model that is scalable and
replicable across India.
Before delving into the potential inclusive banking model, it is neces-
sary to define inclusive banking. The following part of the chapter defines
inclusive banking and provides an overview of the recent trends in
financial inclusion.
Defining Inclusive Banking

India’s tryst with inclusivity in banking began in 1969 with the nation-
alization of commercial banks. But surprisingly, an official definition of
inclusive banking is unavailable in banking regulations and literature. It
is mistaken to be identical to financial inclusion. Since the discussion
about financial inclusion is available in the literature, it has to be veri-
fied whether financial inclusion needs to be differentiated from inclusive
banking. Therefore, we discuss the definition of financial inclusion as the

starting point in the process of defining inclusive banking.
Existing Definition(s) of Financial Inclusion and Financial Inclusion

Universe
Since the nationalization of banks, financial inclusion in India is typically
practised through priority sector lending by banks. However, the term was
formally coined by Y. V. Reddy, ex- Governor, Reserve Bank of India, in
2005 (Joshi, 2013). He called out banks for adopting banking practices
that lead to exclusion of larger sections of population. The main features
of the approach involve ‘connecting’ people with the banking system
and not just focusing on credit. As stated by Thorat (2007), ‘Finan-
cial exclusion can be thought of in two ways, one is exclusion from the
payments system, i.e., not having access to a bank account and the second
type of exclusion is from formal credit markets requiring the excluded to
approach informal and exploitive markets’.
After 2005, the literature is flooded with the definitions and studies on
financial inclusion.
In India, various committees addressing financial inclusion have
defined financial inclusion in broad terms. For instance, the Committee
on Financial Inclusion under the chairmanship of C. Rangarajan (2008)
defined financial inclusion as ‘the process of ensuring access to finan-
cial services and timely and adequate credit where needed by vulnerable
groups such as weaker sections and low-income groups at an affordable
cost’.
The Committee on Financial Sector Reforms (2013), chaired by
Raghuram Rajan, stated, ‘Financial Inclusion, broadly defined, refers to
universal access to a wide range of financial services at a reasonable cost.
These include not only banking products, but also other financial services
such as insurance and equity products’.
The Rajan Committee report (2009) mentioned, ‘Instead of seeing the
issue primarily as expanding credit, which puts the cart before the horse,
we urge a refocus to seeing it (financial inclusion) as expanding access to
financial services, such as payments services, savings products, insurance
products, and inflation-protected pensions’ (p. 6). The Nachiket Mor
Committee (2014) defined financial inclusion as the spread of financial
institutions and financial services across the country. It further adds that
financial inclusion can be said to be complete only when there is access
to a suite of appropriate products and services for all the financial needs
of a household or enterprise. Households planning for long-term goals
such as retirement require inflation-adjusted returns on investment over
substantial time periods.
The report of the Committee on Medium-term Path on Financial
Inclusion (Mohanty, 2015, p. 23) states, ‘Financial inclusion [is] broadly
understood as access to the formal financial sector for the marginal-
ized and formal-finance deprived sections of society’. It also pointed out
that the access and use of bank accounts can be now ‘seamlessly inte-
grated’ with the help of Jan Dhan, Aadhaar and Mobile (JAM) trinity.
It visualized efficient interoperability across various institutions through
technological innovations, mobile wallet and e-money to increase the use
of cashless transactions.
The recent National Strategy for Financial Inclusion NSFI Report
(2019) articulates a five-year (2019–2024) vision and key objectives of
financial inclusion policies in India. It visualizes financial inclusion as an
access to a broad spectrum of financial services. The strategy is depicted
in Fig. 1.3. Launched in August 2014, it was a watershed in the finan-
cial inclusion movement in the country. The programme leverages the
existing large banking network and technological innovations to provide
Fig. 1.3 Household access to financial services (Source India Incomes and
Savings Survey, IISS, 2007)
Fig. 1.4 Chronology of committees on financial inclusion in India (Source

Compiled by the authors)
every household with access to basic financial services, thereby bridging

the gap in the coverage of banking facilities (NSFI, 2019, p. 8).2
Thus, the term financial inclusion involves the entire financial sector
and all financial institutions and instruments. Sometimes the term inclu-
sive finance is used interchangeably with financial inclusion.
Inclusive finance: It is often confused with microfinance. It is
concerned with financial services and products designed to aid low-
income population. It is broader but precise because it regroups all the
activities linked to the financial sector, but also indicates its objective to
include the whole population irrespective of income, gender, caste, class,
race and religion in the economic system.
Most of the literature on inclusive finance defines it in terms of making
an array of financial services accessible to low-income segment of the
population. The inclusive finance or financial inclusion is a broad term
involving a wide-ranging spectrum of financial services and diverse insti-
tutional ecosystem. Thus, it is necessary to delimit the term inclusive
banking and to demarcate its scope and role in this broader framework.
2 Chapter 6 of this book provides a detailed discussion on Government’s initiatives on

inclusive banking.
In the absence of an official definition, inclusive banking has to be

defined as the financial inclusion practised by banks. It has never been
defined officially by any act or committee in India. It will be seen that,
in this book, instead of using broader terms like inclusive finance and
financial inclusion, we deliberately use the term inclusive banking.
Inclusive banking can be defined as the business of banking done by a
banking company, as defined in the Banking Regulation Act of 1949, by
implementing the principles of financial inclusion.
Definition of Inclusive Banking

and Its Ideological Implications
This simple and logical definition of inclusive banking comes with a
complex ideological and practical weight. It combines a development
concept (inclusive) with a commercial concept (banking).
Thus, inclusive banking is financial inclusion in banking services.
However, the social mandate in banking gives rise to a debate on whether
commercial banks should adopt social or development goals. In India, the
social mandate was integrated into the banking functions of the public
sector banks, as they have been given the responsibility of implementing
developmental goals of the government.
This leads us to the ideological debate on the desirability of commer-
cial banks being asked to undertake the priority sector lending and the
developmental goals in the first place. Chapter 2 of this book delves into
the theoretical underpinnings of this conflict.
Inclusive Banking---Global Approach

Globally, a formal approach to financial inclusion can be traced to the
United Nations’ initiatives articulated through the famous ‘Building
Inclusive Financial Sectors for Development’ or the Blue Book (2006).
This detailed vision of inclusive finance described inclusive finance in
terms of making accessible a broad range of financial services to all
bankable households and enterprises at a reasonable cost.
Formal and global level evolution of inclusive banking can be traced
to the World Bank’s adoption of financial inclusion as an enabler for 7 of
the 17 Sustainable Development Goals. The World Bank put forward the
access to finance as one of its world development goals. This prompted
policy-makers and regulators in various countries to actively plan and
strategize policy initiatives in this regard. It defined financial inclusion

as individuals and businesses having access to useful and affordable finan-
cial products and services that meet their needs—transactions, payments,
savings, life style saving schemes, credit and housing finance which are
delivered in a responsible and sustainable way.
Since the World Bank Group identified financial inclusion as a key
enabler in reducing extreme poverty and boosting shared prosperity,
policy-makers have explicitly included it in their macroeconomic policy
goals. Governments have been making policy efforts for inclusive banking
as evident from community banking in USA; or bank nationalization,
establishment of regional rural banks and priority sector lending in India.
Community Banking: It facilitates financial inclusion in the USA.
Since 1977, the Community Reinvestment Act (1977) made it mandatory
for the banks to offer lending to a broader area without just targeting the
richer population. Community banks are smaller in size than the commer-
cial banks and they primarily serve the community where they are located.
Their lending is based on relationship banking and they primarily cater to
small businesses. They fill in the gaps in financial services by providing
credit to rural and small businesses. Community banks are important in
financial inclusion in USA but are declining in number after the mergers
(Kahn et al., 2003). In Germany, the ‘Everyman’ banking account is
aimed at catering to the basic customer similar to the BSBDA in India.
Similarly, the low cost bank account called ‘Mzansi’ exists in South Africa.
The need for a regulatory framework ensuring safety of the consumer is
emphasized by the G20 Toronto Summit (June 2010). The principles
for smooth adoption of innovative models for reducing the costs and
ensuring financial feasibility of inclusive finance for institutions in main-
stream finance like banks and insurance companies and financial inclusion
policy at international level have been laid down by this summit.
Thus, the evolution of financial inclusion in various countries including
India has been characterized by initial policy thrust by the regulatory
authorities, legislature, government policies and commercial banks.
Scope of Inclusive Banking

The scope of inclusive banking could be based on the primary banking
functions. A bank being an intermediary between the surplus and deficit
units in the economy, these functions are deposit mobilization and credit
provision. In this sense, inclusive banking is the act of undertaking

banking functions in an inclusive manner.
It involves banks actively facilitating financial awareness, rural
entrepreneurship and providing support in developmental schemes for
poverty alleviation.3
It is closely integrated with financial inclusion though the latter is a
much broader concept going beyond regular banking operations. Even if
we define its scope to include only regular banking activities, the financial
inclusion agenda cannot be isolated from it, as the universal access to basic
banking services is the first step towards financial inclusion.
As specified in the World Bank’s goals for Universal Financial Access,
inclusive banking aims at providing a bank account to unbanked adult
individuals so that they can participate in payment transactions and use
these accounts for their financial needs (Universal Financial Access 2020,
2018).
Globally, the adoption of a formal National Financial Inclusion
Strategy (NFIS) has accelerated significantly in the past decade (World
Bank Group, 2018).
Evolution of Inclusive Banking in India

The evolution of inclusive banking in India is reviewed from three
perspectives: (1) the committees established for analysis of financial inclu-
sion; (2) the reforms and initiatives actually implemented in this area; and
(3) the actual progress of inclusive banking.
Inclusive Banking - Overview of Recommendations by Various

Committees Since 2000
This section provides an overview of the journey of financial inclu-
sion in India through the formulation and recommendations of various
committees.
The official definition of financial inclusion and an explicit strategy for
financial inclusion was evolved by the Internal Group on Rural Credit and
3 The literature most commonly identifies the exclusion from financial system on account
of low incomes. However, the exclusion on account of caste, colour, race, gender, etc.,
is not widely analysed except for a few studies on gender disparity and caste biases in the
financial system.
Microfinance in 2005. In 2006, the Government of India constituted a

Committee on Financial Inclusion which made wide-ranging recommen-
dations for making Indian financial sector inclusive for both urban and
rural areas. In recent times, the strategy of financial inclusion is steered by
the Financial Stability and Development Council (FSDC) of the Govern-
ment of India. Various committees have identified specific gaps in the
contemporary financial inclusion framework. An overview of the major
recommendations gives an idea of the course of financial inclusion in
India.4
1. Internal Group on Rural Credit and Microfinance, 2005 (H. R.

Khan), recommended the Business Facilitator and Business Corre-
spondent Model. It stated that the banks should appoint busi-
ness correspondents and facilitators for expanding banking services
beyond the brick and mortar offices.
2. In 2008, the Committee on Financial Inclusion chaired by C.
Rangarajan recommended that banks should undertake branch
expansion in certain identified districts and can use primary agri-
cultural cooperatives and NBFCs as business correspondents. It also
suggested that a National Rural Financial Inclusion Plan should be
prepared along with a demarcated financial inclusion fund. These
recommendations were eventually implemented by the RBI and it
was ensured that each village has at least one bank branch. In 2010,
banks were required to formulate three year financial inclusion plans
and a financial inclusion fund was also created.
3. The recommendations of the RBI Sub-Committee of its Central
Board of Directors to study issues and concerns in the Microfi-
nance Institutions Sector, 2011 (Chairman, Y. H. Malegam), were
important as the microfinance sector went through an infamous
crisis during 2010. The Committee recommended restructuring
the microfinance sector and provided a regulatory framework.
According to it, the MFIs that typically catered to low-income
borrowers were classified into a new category of NBFC MFIs. The
4 The following discussion on committees and their recommendations is drawn from

Joshi, D. P. (2013). Financial Inclusion: Journey So Far and Road Ahead. Speech delivered
by Executive Director, RBI, at the Mint Conclave on Financial Inclusion on November 28.
.
latter were covered under the RBI regulation. This helped in formal-
izing and streamlining the microfinance sector to protect the interest
of the low-income borrowers. The composition of the sector and
related issues is discussed in Chapter 4.
4. In 2013, the Committee on Comprehensive Financial Services for
Small Businesses and Low Income Households, 2013 (Chairman
Nachiket Mor), widened the gamut of financial inclusion policy. It
suggested changes related to the use of digitalization and electronic
finance give universal access to financial services in microlending.
The recommendations of these committees were implemented by
the RBI and thus progress was achieved in terms of increase in the
number of bank accounts, number of bank branches and coverage
of unbanked villages.
The range of financial services offered to the low-income groups
was also widened. The RBI created payment banks and small finance
banks.
5. In 2015, Internal Working Group to Revisit the Existing Priority
Sector Lending Guidelines, 2015 (headed by Lily Vadera), expanded
the definition of priority sector to include medium enterprises and
renewable energy, and specified sub-targets of priority sector lending
to small and marginal farmers, and microenterprises.
6. The importance of digital finance has been recognized by the
Committee on Medium Term Path to Financial Inclusion chaired
by Deepak Mohanty. It stressed the importance of direct cash
transfer by the government and gender parity in account opening
through Sukanya Shiksha Scheme. It recommended that Aadhaar
cards should be linked to each individual credit account as a unique
biometric identifier. This step can be crucial for reducing the costs
of monitoring thin-filed borrowers. The Committee also recom-
mended the use of mobile technology to improve the last mile
service delivery by the banks.
Its recommendations have been forward-looking to manage the

problems of inclusive banking through digitalization. Direct social
benefit transfer has been implemented during the pandemic cash
benefit transfer. This has the double welfare effect of preventing
corruption and encouraging the low-income segment to own bank
accounts. The Committee also suggested some other measures like
doing away with agriculture interest subvention scheme, crop insur-

ance for small and marginal farmers, use of credit bureaus for
MSMEs, etc.
Evolution of Inclusive Banking in India—The Initiatives

In India, much before the formal adoption of the financial inclusion
objective, the financial inclusion policy has been implemented through
various initiatives like bank nationalization, regional rural banks, agricul-
tural cooperatives, self-help groups, etc. (K. C. Chakrabarty, 2011). In
fact, even before the nationalization of banks in 1969, India had national-
ized the life insurance companies in 1956 (National Strategy for Financial
Inclusion, 2019).
RBI Initiatives for Inclusive Banking Since 2005

Figure 1.5 depicts important initiatives undertaken by the RBI for inclu-
sive banking in India from 1969 to 2018. According to the National
Fig. 1.5 Chronology of RBI Initiatives for Inclusive Banking (Source Compiled
by the authors)
Financial Inclusion Strategy Report (2019),5 the financial inclusion policy

rests on the bank-led model. The targets of financial inclusion are defined
in terms of branch expansion and bank account ownership. Banks are
the primary channels of implementing financial inclusion policy. This is a
natural choice because firstly, India has a bank-led economy and secondly,
the regulator can closely monitor the progress of inclusion in terms of
banking indicators. Thus, banks were responsible for the progress of
financial inclusion from time to time. They expanded their branches to
the unbanked villages, lended to the priority sector, refinanced the NBFC
MFIs and the cooperative banks, appointed BCs and opened BSBDAs.
After the launch of the PMJDY and PMMY schemes, the focus of inclu-
sive banking has been on their implementation by banks, associated with
MFIs and SHGs.
Evolution and Progress of Inclusive Banking in India—The

Performance
The following discussion provides an overview of the evolution and
progress of inclusive banking in India based on selected parameters which
specifically refer to the RBI initiatives for bank-led financial inclusion.
Total rural banking outlets increased from 67.7 thousand in 2008–
2009 to 597 thousand in 2018–2019. However, the growth in banking
outlets in villages with a population of less than 2000 has been slow as
compared with their growth in rural areas.
The growth in no frills accounts has increased exponentially after the
introduction of the PMJDY in 2014. The growth rate of ATMs also shows
a greater increase after 2014–2015.
Bank-led financial inclusion has been the policy focus after the JAM.
The Current Landscape

of Inclusive Finance in India
Market structure can be explained in terms of the topology of the
entire ecosystem as inclusive banking does not exist in isolation and is
linked with microfinance and SHG activities. On the supply side are
5 https://rbidocs.rbi.org.in/rdocs/content/pdfs/NSFIREPORT100119.pdf. Accessed
25 March 2020.
Banking Outlets in Villages
600000
400000
200000
0
2015-16 2016-17 2017-18 2018-19
Banking Outlets in Villageswith popula on > 2000

Banking Outlets in Villages with popula on < 2000
Fig. 1.6 Progress of inclusive banking in India—Selected parameters (Source

Compiled by the authors from the RBI, STRBI and the World Bank database)
banks, microfinance institutions, SHGs and the government, while on the

demand side are the consumers of inclusive finance and banking who form
the households in need of this service.
The supply side structure of this market is evolving. The number of
players in the market is a primary factor that influences the behaviour
of the participants. This market has grown over the decades. The total
number of SHGs is 65,49,518 as reported by the NRLM website of GOI,
while the Status of Microfinance Report 2018-19 by NABARD reports 1
crore SHGs. The number of MFIs is 223 according to the MFIN report
in March 2020. Thus, the market structure has become competitive. This
is reflected in the provision of services by the MFIs and SHGs.
Banks directly implement the inclusive schemes like PMJDY and
PMMY. They also play an indirect role by financially supporting SHGs
and MFIs. Since only the SHGs, NGOs and MFIs are active in the field,
the poor end up thinking that only these non-bank institutions help them.
As a result, banks never get direct credit for the progress of financial inclu-
sion. In fact, in the current pandemic scenario, banks bear the financial
burden of implementing various government schemes from loan waivers
to moratoriums on loan repayment.
Current Policy---Paternalistic Approach6

The inclusive banking policy in India began from the paternalistic initia-
tive of bank nationalization. It reflected state paternalism as it directed
banks about whom to lend and incentivized the people for productive
borrowing. It implied that the government knows how best to use the
nation’s capital resources.
Banking: Social or Commercial?

Since bank nationalization, the debate continues whether it is desirable for
a commercial bank to have social goals. Various committees (Narsimham
Committee, 1991, 1998) have critically looked at the effect of social
sector lending on the profitability of banks.
Inclusivity in banking requires that the inclusive policy must be finan-
cially feasible and profitable for the banking firms. Lack of profitability
leads to unsustainable business, while lack of conviction in profitability in
business will lead to its failure.
Banks were misused and abused by the government in later years for
financing fiscal deficit. This was criticized from the early 1980s. The
two Narsimham Committees recommended liberalization of banks (from
government fiscal policy!). They criticized priority sector lending norms,
regulated interest rates and fiscal burden on banks. Liberalization of
the banking sector with increased competition, less regulation and free
interest rates was recommended to improve bank profitability and effi-
ciency. These recommendations were implemented partially. As a result,
on the one hand, banks face competition and liberalization in some areas
like deregulation of interest rates while, on the other, they bear the
6 In Esther Duflo’s Marshall Lecture Sense. Duflo, Esther (2013), Paternalism,

Freedom, and Hope in the Fight Against Poverty, Marshal Lecture 2012–13,
University of Cambridge.
financial burden of government’s domestic borrowing, loan waivers and

government schemes. By 2018–2019, the RBI nudged banks to be inde-
pendent. In 2019, bank restructuring was announced with their mega
mergers. In early 2020, the government-aided private banks in coming
out of financial debacles. This schizophrenic policy environment, coupled
with external forces of global trade wars, corporate bankruptcies, loan
defaults, recession and economic slowdown due to pandemic, has made
the entire sector fragile. At this juncture, a paradigm shift with a fresh
perspective on banking business is imperative for the survival and the
revival of the banking sector.
Banking for the Poor Matters---Need

to Change the Narrative
Business models of banks are not developed to include the poor as their
client base.
The bankers treated it apart. To incorporate it into their business
model, they had to be open and agile.
K. C. Chakrabarty categorically stated, ‘We have been very clear that
banks must take up financial inclusion as a viable business. Let banks
prove that this is not a viable business activity for them. We have always
maintained that financial inclusion and removal of poverty cannot happen
unless these are done in a viable manner. It cannot be done as a charity’
(The Economic Times, April 14, 2014).
We are still discussing financial inclusion after more than fifty years of
bank nationalization because banks have never perceived the poor as their
clientele. They do not perceive providing loans to and accepting deposits
from the poor as a viable business. Hence, they follow the policy initia-
tives and government directives apathetically. From a banker’s perspective,
profitable business is found outside the social sector. Hence, all the prod-
ucts are targeted at the regular ‘profitable’ clientele. All banks, private
and public alike, compete for this regular business and are therefore
geographically concentrated. Clustered bank branches on main roads in
any bustling city, e.g. Veera Desai Road in Andheri West (Mumbai); Rajiv
Chowk (New Delhi); and M G Road (Nasik) are glaring examples of this
mindless competition.
The recent pandemic and consequent economic crisis have reminded
us that a vast majority of India’s population has unstable and low incomes.
Banks should realize that a business model focused on a higher income
population is not sustainable in a country where the majority is poor and

has low and unstable incomes due to seasonal employment and, in turn,
lacks assets. At the same time, the social banking approach of serving the
poor for social or charitable purposes is not consistent with economic
logic as is evident from the past experience. Inclusive banking will be
effective only if it has a potential to be a viable business strategy. The
present economic situation is characterized by high NPAs from high-
income clients, abysmally low industrial growth and lower interest rates.
In this situation, banks can no longer depend on the existing business
model for their survival. Banking for the poor can provide a promising
alternate business model in this situation. They should explore the possi-
bilities of developing new business models based on the vast client pool
of the low-income population. The poor have sustained without banks.
Today, the question is: Can the banks survive without serving them?
References
Allan, A., Massu, M., & Svarer, C. (2013). Banking on change: Breaking barriers
to financial inclusion. Plan, Barclays and Care, 32.
Barr, M. S. (2004, September). Banking the poor: Policies to bring low-income
Americans into financial mainstream (Research Brief). Brookings Institution.
Beck, T., Demirguc-Kunt, A., & Martinez Peria, M. S. (2006). Banking services
for everyone? Barriers to bank access and use around the world. The World
Bank.
Chakrabarty, K. C. (2011, October 14). Address at the FICCI (Federation of
Indian Chambers of Commerce & Industry) – UNDP (The United Nations
Development Programme Seminar on “Financial Inclusion: Partnership between
Banks, MFIs and Communities”. New Delhi.
Chakrabarty, K. C. (2014, April 14). Interview with The Economic Times.
Retrieved from https://economictimes.indiatimes.com/opinion/interviews/
reserve-bank-of-india-must-end-discretionary-regulation-k-c-chakrabarty-dep
uty-governor-rbi.
Cull, R., Demirguc-Kunt, A., & Morduch, J. (2012). Banking the world: Empir-
ical foundations of financial inclusion. Massachusetts Institute of Technology,
Day, G. S., et al. (2004). Invited commentaries on “evolving to a new dominant
logic for marketing”. Journal of Marketing, 68(1), 18–27.
Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The
Global Findex database 2017: Measuring financial inclusion and the Fintech
Revolution. Washington, DC: World Bank. https://doi.org/10.1596/978-1-
4648-1259-0. License: Creative Commons Attribution CC BY 3.0 IGO.
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§. 11. Of the Worms of the Spindle.
I promised at the latter end of Numb. 2. to give a more copious
account than there I did of making Worms, when I came to exercise
upon Printing-Press Spindles; and being now arrived to it, I shall
here make good my promise.
¶. 1. The Worms for Printing-Press Spindles must be projected

with such a declivity, as that they may come down at an
assigned progress of the Bar.
The assigned progress may be various, and yet the Spindle do its
office: For if the Cheeks of the Press stand wide assunder, the
sweep or progress of the same Bar will be greater than if they stand
nearer together.
It is confirm’d upon good consideration and Reason as well as
constant experience, that in a whole Revolution of the Spindle, in the
Nut, the Toe does and ought to come down two Inches and an half;
but the Spindle in work seldom makes above one quarter of a
Revolution at one Pull, in which sweep it comes down but half an
Inch and half a quarter of an Inch; and the reason to be given for this
coming down, is the squeezing of the several parts in the Press,
subject to squeeze between the Mortesses of the Winter and the
Mortesses the Head works in; and every Joynt between these are
subject to squeeze by the force of a Pull. As first, The Winter may
squeeze down into its Mortess one third part of the thickness of a
Scabbord. (Allowing a Scabbord to be half a Nomparel thick.)
Secondly, The Ribs squeeze closer to the Winter one Scabbord.
Thirdly, The Iron-Ribs to the Wooden Ribs one Scabbord. Fourthly,
The Cramp-Irons to the Planck of the Coffin one Scabbord. Fifthly,
The Planck it self half a Scabbord. Sixthly, The Stone to the Planck
one Scabbord. Seventhly, The Form to the Stone half a Scabbord.
Eighthly, The Justifyers in the Mortess of the Head three Scabbords.
Ninthly, The Nut in the Head one Scabbord. Tenthly, The Paper,
Tympans and Blankets two Scabbords. Eleventhly, Play for the Irons
of the Tympans four Scabbords. Altogether make fifteen Scabbords
and one third part of a Scabbord thick, which (as aforesaid) by
allowing two Scabbords to make a Nomparel, and as I shewed in
Vol. 2. Numb. 2. §. 2. One hundred and fifty Nomparels to make one
Foot, gives twelve and an half Nomparels for an Inch, and
consequently twenty five Scabbords for an Inch; so by proportion,
fifteen Scabbords and one third part of a Scabbord, gives five eighth
parts of an Inch, and a very small matter more, which is just so much
as the Toe of the Spindle comes down in a quarter of a Revolution.
This is the Reason that the coming down of the Toe ought to be just
thus much; for should it be less, the natural Spring that all these
Joynts have, when they are unsqueez’d, would mount the Irons of
the Tympans so high, that it would be troublesom and tedious for the
Press-man to Run them under the Plattin, unless the Cheeks stood
wider assunder, and consequently every sweep of the Bar in a Pull
exceed a quarter of a Revolution, which would be both laborious for
the Press-man, and would hinder his usual riddance of Work.
I shew’d in Numb. 2. fol. 31, 32, 33, 34, 35. the manner of making a
Screw in general; but assigned it no particular Rise; which for the
aforesaid reason, these Printing-Press Screws are strictly bound to
have: Therefore its assigned Rise being two Inches and an half in a
Revolution, This measure must be set off upon the Cilindrick Shank,
from the top towards the Cube of the Spindle, on any part of the
Cilinder, and there make a small mark with a fine Prick-Punch, and
in an exact Perpendicular to this mark make another small mark on
the top of the Cilinder, and laying a straight Ruler on these two
marks, draw a straight line through them, and continue that line
almost as low as the Cube of the Spindle. Then devide that portion
of the straight line contained between the two marks into eight equal
parts, and set off those equal parts from the two Inch and half mark
upwards, and then downwards in the line so oft as you can: Devide
also the Circumference of the Shank of the Cilinder into eight equal
parts, and draw straight lines through each devision, parallel to the
first upright line; and describe the Screw as you were directed in the
afore-quoted place; so will you find that the revolution of every line
so carried on about the Shank of the Cilinder, will be just two Inches
and an half off the top of the Shank: which measure and manner of
working may be continued downward to within an Inch and an half of
the Cube of the Spindle. This is the Rule and Measure that ought to
be observ’d for ordinary Presses: But if for some by-reasons the
aforesaid Measure of two Inches and an half must be varied, then
the varied Measure must be set off from the top of the Cilinder, and
working with that varied Measure as hath been directed, the Toe of
the Spindle will come down lower in a revolution if the varied
Measure be longer, or not so low if the varied Measure be shorter.
There is a Notion vulgarly accepted among Workmen, that the
Spindle will Rise more or less for the number of Worms winding
about the Cilinder; for they think, or at least by tradition are taught to
say, that a Three-Worm’d Spindle comes faster and lower down than
a four-Worm’d Spindle: But the opinion is false; for if a Spindle were
made but with a Single-Worm, and should have this Measure, viz.
Two Inches and an half set off from the top, and a Worm cut to make
a Revolution to this Measure, it would come down just as fast, and
as low, as if there were two, three, four, five or six Worms, &c. cut in
the same Measure: For indeed, the numbers of Worms are only
made to preserve the Worms of the Spindle and Nut from wearing
each other out the faster; for if the whole stress of a Pull should bear
against the Sholder of a single Worm, it would wear and shake in the
Nut sooner by half than if the stress should be borne by the Sholders
of two Worms; and so proportionably for three, four, five Worms, &c.
But the reason why four Worms are generally made upon the
Spindle, is because the Diameters of the Spindle are generally of
this propos’d size; and therefore a convenient strength of Mettal may
be had on this size for four Worms; But should the Diameter of the
Spindle be smaller, as they sometimes are when the Press is
designed for small Work, only three Worms will be a properer
number than four; because when the Diameter is small, the
thickness of the Worms would also prove small, and by the stress of
a Pull would be more subject to break or tear the Worms either of the
Spindle or Nut.
And thus I hope I have performed the promise here I made at the
latter end of Numb. 2. Whither I refer you for the breadth, and reason
of the breadth of the Worm.
¶. 13. Of the Bar marked B in Plate 8.
This Bar is Iron, containing in length about two Foot eight Inches and
an half, from a to b, and its greatest thickness, except the Sholder,
an Inch and a quarter; The end a hath a Male-Screw about an Inch
Diameter and an Inch long, to which a Nut with a Female-Screw in it
as at C is fitted. The Iron Nut in which this Female-Screw is made,
must be very strong, viz. at least an Inch thick, and an Inch and three
quarters in Diameter; in two opposite sides of it is made two Ears,
which must also be very strong, because they must with heavy blows
be knock’t upon to draw the Sholder of the square shank on the Bar,
when the square Pin is in the Eye of the Spindle close and steddy up
to the Cube on the Spindle. The square Pin of the Bar marked c is
made to fit just into the Eye, through the middle of the Cube of the
Spindle, on the hither end of this square Pin is made a Sholder or
stop to this square Pin, as at d. This Sholder must be Filed exactly
Flat on all its four insides, that they may be drawn close and tight up
to any flat side of the Cube on the Spindle; It is two Inches square,
that it may be drawn the firmer, and stop the steddyer against any of
the flat sides of the said Cube, when it is hard drawn by the strength
of the Female-Screw in the aforesaid Nut at C. The thickness from d
to e of this Sholder is about three quarters of an Inch, and is Bevil’d
off towards the Handle of the Bar with a small Molding.
The substance of this Bar, as aforesaid, is about an Inch and a
quarter; but its Corners are all the way slatted down till within five
Inches of the end: And from these five Inches to the end, it is taper’d
away, that the Wooden-Handle may be the stronger forced and
fastned upon it.
About four Inches off the Sholder, the Bar is bowed beyond a right
Angle, yet not with an Angle, but a Bow, which therefore lies ready to
the Press-man’s Hand, that he may Catch at it to draw the Wooden-
Handle of the Bar within his reach.
This Wooden-Handle with long Working grows oft loose; but then it is
with hard blows on the end of it forced on again, which oft splits the
Wooden-Handle and loosens the square Pin at the other end of the
Bar, in the Eye of the Spindle: To remedy which inconvenience, I
used this Help, viz. To weld a piece of a Curtain-Rod as long as the
Wooden-Handle of the Bar, to the end of the Iron Bar, and made a
Male-screw at the other end with a Female-screw to fit it; Then I
bored an hole quite through the Wooden-Handle, and Turn’d the
very end of the Wooden-Handle with a small hollow in it flat at the
bottom, and deep enough to bury the Iron-Nut on the end of the
Curtain-Rod, and when this Curtain-Rod was put through the Hollow
in the Wooden-Handle and Screwed fast to it at the end, it kept the
Wooden-Handle, from flying off; Or if it loosened, by twisting the Nut
once or twice more about, it was fastned again.
¶. 14. Of the Hose, Garter, and Hose-Hooks.
The Hose are the upright Irons in Plate 8. at a a, They are about
three quarters of an Inch square, both their ends have Male-screws
on them; The lower end is fitted into a square Hole made at the
parting of the Hose-Hooks, which by a square Nut with a Female-
screw in it, is Screwed tight up to them; Their upper ends are let into
square Holes made at the ends of the Garter, and by Nuts with
Female-Screws in them, and Ears to turn them about as at l l are
drawn up higher, if the Plattin-Cords are too loose; or else let down
lower if they are too tight: These upper Screws are called the Hose-
Screws.
The Garter (but more properly the Coller) marked b b, is the round
Hoop incompassing the flat Groove or Neck in the Shank of the
Spindle at e e; This round Hoop is made of two half-round Hoops,
having in a Diametrical-line without the Hoop square Irons of the
same piece proceeding from them, and standing out as far as g g,
These Irons are so let into each other, that they comply and run
Range with the square Sholders at both ends, wherein square Holes
are made at the ends of the Hose. They are Screwed together with
two small Screws, as at h h.
The four Hose-Hooks are marked i i i i, They proceed from two
Branches of an Iron Hoop at k encompassing the lower end of the
Spindle, on either Corner of the Branch, and have notches filled in
their outer-sides as in the Figure, which notches are to contain
several Turns of Whip-cord in each notch, which Whip-cord being
also fastned to the Hooks on the Plattin, holds the Plattin tight to the
Hooks of the Hose.
¶. 15. Of the Ribs, and Cramp-Irons.
The Ribs are delineated in Plate 8. at E, they are made of four

square Irons the length of the Wooden-Ribs and End-Rails, viz. four
Foot five Inches long, and three quarters of an Inch square, only one
end is batter’d to about a quarter of an Inch thick, and about two
Inches and an half broad, in which battering four or five holes are
Punch’t for the nailing it down to the Hind-Rail of the Wooden-Ribs.
The Fore-end is also batter’d down as the Hind-end, but bound
downwards to a square, that it may be nailed down on the outer-side
of the Fore-Rail of the Wooden-Ribs.
Into the bottom of these Ribs, within nine Inches of the middle, on
either side is made two Female-Duftails about three quarters of an
Inch broad, and half a quarter of an Inch thick, which Female-Duftails
have Male-Duftails as at a a a a fitted stiff into them, about an Inch
and three quarters long; and these Male-Duftails have an hole
punched at either end, that when they are fitted into the Female-
Duftails in the Ribs, they may in these Holes be Nailed down the
firmer to the Wooden-Ribs.
Plate 9.
These Ribs are to be between the upper and the under-side exactly
of an equal thickness, and both to lye exactly Horizontal in straight
lines; For irregularities will both Mount and Sink the Cramp-Irons,
and make them Run rumbling upon the Ribs.
The upper-sides of these Ribs must be purely Smooth-fil’d and
Pollish’d, and the edges a little Bevil’d roundish away, that they may
be somewhat Arching at the top; because then the Cramp-Irons Run
more easily and ticklishly over them.
The Cramp-Irons are marked F in Plate 8. They are an Inch and an
half long besides the Battering down at both ends as the Ribs were;
They have three holes Punched in each Battering down, to Nail them
to the Planck of the Coffin; They are about half an Inch deep, and
one quarter and an half thick; their upper-sides are smoothed and
rounded away as the Ribs.
¶. 16. Of the Spindle for the Rounce, described in Plate 9. at a.
The Axis or Spindle is a straight Bar of Iron about three quarters of

an Inch square, and is about three Inches longer than the whole
breadth of the Frame of the Ribs, viz. two Foot two Inches: The
farther end of it is Filed to a round Pin (as at a) three quarters of an
Inch long, and three quarters of an Inch in Diameter; the hither end is
filed away to such another round Pin, but is two Inches and a quarter
long (as at b); at an Inch and a quarter from this end is Filed a
Square Pin three quarters of an Inch long, and within half an Inch of
the end is Filed another round Pin, which hath another Male-Screw
on it, to which is fitted a square Iron Nut with a Female-Screw in it.
On the Square Pin is fitted a Winch somewhat in form like a Jack-
winch, but much stronger; the Eye of which is fitted upon the Square
aforesaid, and Screwed up tight with a Female-Screw. On the
straight Shank of this Winch is fitted the Rounce, marked e.
The round ends of this Axis are hung up in two Iron-Sockets (as at c
c) fastned with Nails (but more properly with Screws) on the outside
the Wooden Frame of the Ribs.
The Girt-Barrel marked d is Turned of a Piece of Maple or Alder-
wood, of such a length, that it may play easily between the two
Wooden Ribs; and of such a diameter, that in one revolution of it,
such a length of Girt may wind about it as shall be equal to half the
length contained between the fore-end Iron of the Tympan, and the
inside of the Rail of the Inner-Tympan; because two Revolutions of
this Barrel must move the Carriage this length of space.
This Barrel is fitted and fastned upon the Iron Axis, at such a
distance from either end, that it may move round between the
Wooden Ribs aforesaid.
¶. 17. Of the Press-Stone.
The Press-Stone should be Marble, though sometimes Master

Printers make shift with Purbeck, either because they can buy them
cheaper, or else because they can neither distinguish them by their
appearance, or know their different worths.
Its thickness must be all the way throughout equal, and ought to be
within one half quarter of an Inch the depth of the inside of the
Coffin; because the matter it is Bedded in will raise it high enough.
Its length and breadth must be about half an Inch less than the
length and breadth of the inside of the Coffin: Because Justifiers of
Wood, the length of every side, and almost the depth of the Stone,
must be thrust between the insides of the Coffin and the outsides of
the Stone, to Wedge it tight and steddy in its place, after the Press-
man has Bedded it. Its upper-side, or Face must be exactly straight
and smooth.
I have given you this description of the Press-Stone, because they
are thus generally used in all Printing-Houses: But I have had so
much trouble, charge and vexation with the often breaking of Stones,
either through the carelesness or unskilfulness (or both) of Press-
men, that necessity compell’d me to consider how I might leave them
off; and now by long experience I have found, that a piece of
Lignum-vitæ of the same size, and truly wrought, performs the office
of a Stone in all respects as well as a Stone, and eases my mind, of
the trouble, charge and vexation aforesaid, though the first cost of it
be greater.
¶. 18. Of the Plattin marked d in Plate 9.
The Plattin is commonly made of Beechen-Planck, two Inches and

an half thick, its length about fourteen Inches, and its breadth about
nine Inches. Its sides are Tryed Square, and the Face or under-side
of the Plattin Plained exactly straight and smooth. Near the four
Corners on the upper-side, it hath four Iron Hooks as at a a a a,
whose Shanks are Wormed in.
In the middle of the upper-side is let in and fastned an Iron Plate
called the Plattin-Plate, as b b b b, a quarter of an Inch thick, six
Inches long, and four Inches broad; in the middle of this Plate is
made a square Iron Frame about half an Inch high, and half an Inch
broad, as at c. Into this square Frame is fitted the Stud of the Plattin
Pan, so as it may stand steddy, and yet to be taken out and put in as
occasion may require.
The Stud marked d, is about an Inch thick, and then spreads wider
and wider to the top (at e e e e) of it, till it becomes about two Inches
and an half wide; and the sides of this spreading being but about half
a quarter of an Inch thick makes the Pan. In the middle of the bottom
of this Pan is a small Center hole Punch’d for the Toe of the Spindle
to work in.
¶. 19. Of the Points and Point-Screws.
The Points are made of Iron Plates about the thickness of a Queen
Elizabeth Shilling: It is delineated at e in Plate 9. which is sufficient to
shew the shape of it, at the end of this Plate, as at a, stands upright
the Point. This Point is made of a piece of small Wyer about a
quarter and half quarter of an Inch high, and hath its lower end Filed
away to a small Shank about twice the length of the thickness of the
Plate; so that a Sholder may remain. This small Shank is fitted into a
small Hole made near the end of the Plate, and Revetted on the
other side, as was taught Numb. 2. Fol. 24. At the other end of the
Plate is filed a long square notch in the Plate as at b c quarter and
half quarter Inch wide, to receive the square shank of the Point-
Screws.
The Point-Screw marked f is made of Iron; It hath a thin Head about
an Inch square, And a square Shank just under the Head, an Inch
deep, and almost quarter and half quarter Inch square, that the
square Notch in the hinder end of the Plate may slide on it from end
to end of the Notch; Under this square Shank is a round Pin filed
with a Male-Screw upon it, to which is fitted a Nut with a Female-
Screw in it, and Ears on its outside to twist about, and draw the Head
of the Shank close down to the Tympan, and so hold the Point-Plate
fast in its Place.
¶. 20. Of the Hammer, described at h, and Sheeps-Foot

described at i in Plate 9.
The Hammer is a common Hammer about a quarter of a Pound

weight; It hath no Claws but a Pen, which stands the Press-man
instead when the Chase proves so big, that he is forced to use small
Quoins.
The Figure of the Sheeps-Foot is description sufficient. Its use is to
nail and un-nail the Balls.
The Sheeps-Foot is all made of Iron, with an Hammer-head at one
end, to drive the Ball-Nails into the Ball-Stocks, and a Claw at the
other end, to draw the Ball-Nails out of the Ball-Stocks.
¶. 21. Of the Foot-step, Girts, Stay of the Carriage, Stay of the
Frisket, Ball-Stocks,
Paper-Bench, Lye-Trough, Lye-Brush, Lye-Kettle, Tray to wet
Paper
in, Weights to Press Paper, Pelts, or Leather, Wool or Hair, Ball-
Nails or Pumping-Nails.
The Foot-Step is an Inch-Board about a Foot broad, and sixteen

Inches long. This Board is nailed upon a piece of Timber about
seven or eight Inches high, and is Bevil’d away on its upper-side, as
is also the Board on its under-side at its hither end, that the Board
may stand aslope upon the Floor. It is placed fast on the Floor under
the Carriage of the Press. Its Office shall be shewed when we come
to treat of Exercise of the Press-man.
Girts are Thongs of Leather, cut out of the Back of an Horse-hide, or
a Bulls hide, sometimes an Hogs-hide. They are about an Inch and
an half, or an Inch and three quarters broad. Two of them are used
to carry the Carriage out and in. These two have each of them one of
their ends nailed to the Barrel on the Spindle of the Rounce, and the
other ends nailed to the Barrel behind the Carriage in the Planck of
the Coffin, and to the Barrel on the fore-end of the Frame of the
Coffin.
The Stay of the Carriage is sometimes a piece of the same Girt
fastned to the outside of the further Cheek, and to the further hinder
side of the Frame of the Carriage. It is fastned at such a length by
the Press-man, that the Carriage may ride so far out, as that the
Irons of the Tympan may just rise free and clear off the fore-side of
the Plattin.
Another way to stay the Carriage is to let an Iron Pin into the upper-
side of the further Rail of the Frame of the Ribs, just in the place
where the further hinder Rail of the Carriage stands projecting over
the Rib-Rail, when the Iron of the Tympan may just rise free from the
Fore-side of the Plattin; for then that projecting will stop against the
Iron Pin.
The Stay of the Frisket is made by fastning a Batten upon the middle
of the Top-side of the Cap, and by fastning a Batten to the former
Batten perpendicularly downwards, just at such a distance, that the
upper-side of the Frisket may stop against it when it is turned up just
a little beyond a Perpendicular. When a Press stands at a convenient
distance from a Wall, that Wall performs the office of the aforesaid
Stay.
Ball-Stocks are Turn’d of Alder or Maple. Their Shape is delineated
in Plate 9. at g: They are about seven Inches in Diameter, and have
their under-side Turned hollow, to contain the greater quantity of
Wool or Hair, to keep the Ball-Leathers plump the longer.
The Lye-Trough (delineated in Plate 9. at k) is a Square Trough
made of Inch-Boards, about four Inches deep, two Foot four Inches
long, and one Foot nine Inches broad, and flat in the Bottom. Its
inside is Leaded with Sheet-Lead, which reaches up over the upper
Edges of the Trough. In the middle of the two ends (for so I call the
shortest sides) on the outer-sides as a a, is fastned a round Iron Pin,
which moves in a round hole made in an Iron Stud with a square
Sprig under it, to be drove and fastned into a Wooden Horse, which
Horse I need not describe, because in Plate aforesaid I have given
you the Figure of it.
The Paper-Bench is only a common Bench about three Foot eight
Inches long, one Foot eight Inches broad, and three Foot four Inches
high.
The Lye-Brush is made of Hogs-Bristles fastned into a Board with
Brass-Wyer, for durance sake: Its Board is commonly about nine
Inches long, and four and an half Inches broad; and the length of the
Bristles about three Inches.
To perform the Office of a Lye-Kettle (which commonly holds about
three Gallons) the old-fashion’d Chafers are most commodious, as
well because they are more handy and manageable than Kettles
with Bails, as also because they keep Lye longer hot.
The Tray to Wet Paper in is only a common Butchers Tray, large
enough to Wet the largest Paper in.
The Weight to Press Paper with, is either Mettal, or Stone, flat on the
Bottom, to ly steddy on the Paper-Board: It must be about 50 or 60
pound weight.
For Pelts or Leather, Ball-Nails or Pumping-Nails, Wool or Hair,
Vellom or Parchment or Forrel, the Press-man generally eases the
Master-Printer of the trouble of choosing, though not the charge of
paying for them: And for Paste, Sallad Oyl, and such accidental
Requisites as the Press-man in his work may want, the Devil
commonly fetches for him.
¶. 22. Of Racks to Hang Paper on, and of the Peel.
Our Master-Printer must provide Racks to hang Paper on to Dry.

They are made of Deal-board Battens, square, an Inch thick, and an
Inch and an half deep, and the length the whole length of the Deal,
which is commonly about ten or eleven Foot long, or else so long as
the convenience of the Room will allow: The two upper corners of
these Rails are rounded off that they may not mark the Paper.
These Racks are Hung over Head, either in the Printing-House, or
Ware-house, or both, or any other Room that is most convenient to
Dry Paper in; they are hung athwart two Rails an Inch thick, and
about three or four Inches deep, which Rails are fastned to some
Joysts or other Timber in the Ceiling by Stiles perpendicular to the
Ceiling; These Rails stand so wide assunder, that each end of the
Racks may hang beyond them about the distance of two Foot, and
have on their upper edge at ten Inches distance from one another,
so many square Notches cut into them as the whole length of the
Rail will bear; Into these square notches the Racks are laid parallel
to each other with the flat side downwards, and the Rounded off side
upwards.
The Peel is described in Plate 9. at l, which Figure sufficiently shews
what it is; And therefore I shall need say no more to it, only its
Handle may be longer or shorter according as the height of the
Room it is to be used in may require.
¶. 23. Of Inck.
The providing of good Inck, or rather good Varnish for Inck, is none
of the least incumbent cares upon our Master-Printer, though
Custom has almost made it so here in England; for the process of
making Inck being as well laborious to the Body, as noysom and
ungrateful to the Sence, and by several odd accidents dangerous of
Firing the Place it is made in, Our English Master-Printers do
generally discharge themselves of that trouble; and instead of having
good Inck, content themselves that they pay an Inck-maker for good
Inck, which may yet be better or worse according to the Conscience
of the Inck-maker.
That our Neighbours the Hollanders who exhibit Patterns of good
Printing to all the World, are careful and industrious in all the
circumstances of good Printing, is very notorious to all Book-men;
yet should they content themselves with such Inck as we do, their
Work would appear notwithstanding the other circumstances they
observe, far less graceful than it does, as well as ours would appear
more beautiful if we used such Inck as they do: for there is many
Reasons, considering how the Inck is made with us and with them,
why their Inck must needs be better than ours. As First, They make
theirs all of good old Linseed-Oyl alone, and perhaps a little Rosin in
it sometimes, when as our Inck-makers to save charges mingle
many times Trane-Oyl among theirs, and a great deal of Rosin;
which Trane-Oyl by its grossness, Furs and Choaks up a Form, and
by its fatness hinders the Inck from drying; so that when the Work
comes to the Binders, it Sets off; and besides is dull, smeary and
unpleasant to the Eye. And the Rosin if too great a quantity be put in,
and the Form be not very Lean Beaten, makes the Inck turn yellow:
And the same does New Linseed-Oyl.
Secondly, They seldom Boyl or Burn it to that consistence the
Hollanders do, because they not only save labour and Fewel, but
have a greater weight of Inck out of the same quantity of Oyl when
less Burnt away than when more Burnt away; which want of Burning
makes the Inck also, though made of good old Linseed-Oyl Fat and
Smeary, and hinders its Drying; so that when it comes to the Binders
it also Sets off.
Thirdly, They do not use that way of clearing their Inck the
Hollanders do, or indeed any other way than meer Burning it,
whereby the Inck remains more Oyly and Greasie than if it were well
clarified.
Fourthly, They to save the Press-man the labour of Rubbing the
Blacking into Varnish on the Inck-Block, Boyl the Blacking in the
Varnish, or at least put the Blacking in whilst the Varnish is yet
Boyling-hot, which so Burns and Rubifies the Blacking, that it loses
much of its brisk and vivid black complexion.
Fifthly, Because Blacking is dear, and adds little to the weight of
Inck, they stint themselves to a quantity which they exceed not; so
that sometimes the Inck proves so unsufferable Pale, that the Press-
man is forc’d to Rub in more Blacking upon the Block; yet this he is
often so loth to do, that he will rather hazard the content the Colour
shall give, than take the pains to amend it: satisfying himself that he
can lay the blame upon the Inck-maker.
Having thus hinted at the difference between the Dutch and English
Inck, I shall now give you the Receipt and manner of making the
Dutch-Varnish.
They provide a Kettle or a Caldron, but a Caldron is more proper,
such an one as is described in Plate 9. at m. This Vessel should hold
twice so much Oyl as they intend to Boyl, that the Scum may be
some considerable time a Rising from the top of the Oyl to the top of
the Vessel to prevent danger. This Caldron hath a Copper Cover to
fit the Mouth of it, and this Cover hath an Handle at the top of it to
take it off and put it on by. This Caldron is set upon a good strong
Iron Trevet, and fill’d half full of old Linseed-Oyl, the older the better,
and hath a good Fire made under it of solid matter, either Sea Coal,
Charcoal or pretty big Chumps of Wood that will burn well without
much Flame; for should the Flame rise too high, and the Oyl be very
hot at the taking off the Cover of the Caldron, the fume of the Oyl
might be apt to take Fire at the Flame, and endanger the loss of the
Oyl and Firing the House: Thus they let Oyl heat in the Caldron till
they think it is Boyling-hot; which to know, they peel the outer Films
of an Oynion off it, and prick the Oynion fast upon the end of a small
long Stick, and so put it into the heating Oyl: If it be Boyling-hot, or
almost Boyling-hot, the Oynion will put the Oyl into a Fermentation,
so that a Scum will gather on the top of the Oyl, and rise by degrees,
and that more or less according as it is more or less Hot: But if it be
so very Hot that the Scum rises apace, they quickly take the Oynion
out, and by degrees the Scum will fall. But if the Oyl be Hot enough,
and they intend to put any Rosin in, the quantity is to every Gallon of
Oyl half a Pound, or rarely a whole Pound. The Rosin they beat
small in a Mortar, and with an Iron Ladle, or else by an Handful at a
time strew it in gently into the Oyl lest it make the Scum rise too fast;
but every Ladle-full or Handful they put in so leasurely after one
another, that the first must be wholly dissolv’d before they put any
more in; for else the Scum will Rise too fast, as aforesaid: So that
you may perceive a great care is to keep the Scum down: For if it
Boyl over into the Fire never so little, the whole Body of Oyl will take
Fire immediately.
If the Oyl be Hot enough to Burn, they Burn it, and that so often till it
be Hard enough, which sometimes is six, seven, eight times, or
more.
To Burn it they take a long small Stick, or double up half a Sheet of
Paper, and light one end to set Fire to the Oyl; It will presently Take if
the Oyl be Hot enough, if not, they Boyl it longer, till it be.
To try if it be Hard enough, they put the end of a Stick into the Oyl,
which will lick up about three or four drops, which they put upon an
Oyster-shell, or some such thing, and set it by to cool, and when it is
cold they touch it with their Fore or Middle-Finger and Thumb, and
try its consistence by sticking together of their Finger and Thumb; for
if it draw stiff like strong Turpentine it is Hard enough, if not, they
Boyl it longer, or Burn it again till it be so consolidated.
When it is well Boyled they throw in an Ounce of Letharge of Silver
to every four Gallons of Oyl to Clarifie it, and Boyl it gently once
again, and then take it off the Fire to stand and cool, and when it is
cool enough to put their Hand in, they Strain it through a Linnen
Cloath, and with their Hands wring all the Varnish out into a Leaded
Stone Pot or Pan, and keeping it covered, set it by for their use; The
longer it stands by the better, because it is less subject to turn Yellow
on the Paper that is Printed with it.
This is the Dutch way of making Varnish, and the way the English
Inck-makers ought to use.
Note, First, That the Varnish may be made without Burning the Oyl,
viz. only with well and long Boyling it; for Burning is but a violent way
of Boyling, to consolidate it the sooner.
Secondly, That an Apple or a Crust of Bread, &c. stuck upon the end
of a Stick instead of an Oynion will also make the Scum of the Oyl
rise: For it is only the Air contained in the Pores of the Apple, Crust
or Oynion, &c. pressed or forced out by the violent heat of the Oyl,
that raises the many Bubbles on the top of the Oyl: And the
connection of those Bubbles are vulgarly called Scum.
Thirdly, The English Inck-makers that often make Inck, and that in
great quantities, because one Man may serve all England, instead of
setting a Caldron on a Trevet, build a Furnace under a great
Caldron, and Trim it about so with Brick, that it Boyls far sooner and
more securely than on a Trevet; because if the Oyl should chance to
Boyl over, yet can it not run into the Fire, being Fenced round about
with Brick as aforesaid, and the Stoking-hole lying far under the
Caldron.
Fourthly, When for want of a Caldron the Master-Printer makes
Varnish in a Kettle, He provides a great piece of thick Canvass, big
enough when three or four double to cover the Kettle, and also to
hang half round the sides of the Kettle: This Canvass (to make it
more soluble) is wet in Water, and the Water well wrung out again,
so that the Canvass remains only moist: Its use is to throw flat over
the Mouth of the Kettle when the Oyl is Burning, to keep the smoak
in, that it may stifle the Flame when they see cause to put it out. But
the Water as was said before, must be very well wrung out of the
Canvass, for should but a drop or two fall from the sides of it into the
Oyl when it is Burning, it will so enrage the Oyl, and raise the Scum,
that it might endanger the working over
the top of the
Kettle
.
Having shewn you the Master-Printers Office, I account it suitable to

proper Method, to let you know how the Letter-Founder Cuts the
Punches, how the Molds are made, the Matrices Sunck, and the
Letter Cast and Drest, for all these Operations precede the
Compositers Trade, as the Compositers does the Press-mans;
wherefore the next Exercises shall be (God willing) upon Cutting of
the Steel-Punches.
MECHANICK EXERCISES:
Or, the Doctrine of
Handy-works.
Applied to the Art of
Letter-Cutting.
PREFACE.
LEtter-Cutting is a Handy-Work hitherto kept so conceal’d among the

Artificers of it, that I cannot learn any one hath taught it any other;
But every one that has used it, Learnt it of his own Genuine
Inclination. Therefore, though I cannot (as in other Trades) describe
the general Practice of Work-men, yet the Rules I follow I shall shew
here, and have as good an Opinion of these Rules, as those have
that are shyest of discovering theirs. For, indeed, by the appearance
of some Work done, a judicious Eye may doubt whether they go by
any Rule at all, though Geometrick Rules, in no Practice whatever,
ought to be more nicely or exactly observed than in this.
§. 12. ¶. 1. Of Letter-Cutters Tools.

The making of Steel-Punches is a Branch of the Smith’s Trade: For,
as I told you in the Preface to Numb. 1. The Black-Smith’s Trade
comprehends all Trades that use either Forge or File, from the
Anchor-Smith, to the Watch-maker: They all working by the same
Rules, though not with equal exactness; and all using the same
Tools, though of different Sizes from those the Common Black-Smith

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To the bank personnel for continuing to serve the public

Chapter 6 reviews the role of government schemes and reflects that

Mumbai, India Lalitagauri Kulkarni

1 Inclusive Banking—Concept and Context 1

Fig. 1.1 Status of Financial Inclusion in India (Source: Trends

Fig. 3.4 Composition of microcredit by lender institutions (Source

Fig. 5.3 Structure of Microlending Sector in India (Source

Table 1.1 Barriers to financial inclusion 10

Inclusive Banking—Concept and Context

© The Author(s), under exclusive license to Springer Nature 1

Banks are an important link to transfer the governmental benefits

Inclusive Banking: An Economist’s Approach

Need to Redefine the Existing

In most discussions on financial inclusion, the microfinance sector

Why Are We Still Discussing

At Macro-level: The Importance of Financial Inclusion for Poverty

linkage between the untapped potential of informal savings groups and

Low Income-- Non-Poor

Below Subsistence Level Popula on 21% in

Where Does the Need for a Special

Table 1.1 Barriers to financial inclusion

Supply side barriers Demand side barriers

• Lack of understanding or information of • Need for liquidity and cash in hand

Source Compiled by the authors

Socio-Cultural Dimensions of Gender Inequality in Financial

provided by her bank as her husband or son could withdraw from it

Can New Models in Inclusive Banking Overcome These Barriers?

Defining Inclusive Banking

banking. Therefore, we discuss the definition of financial inclusion as the

Existing Definition(s) of Financial Inclusion and Financial Inclusion

Fig. 1.4 Chronology of committees on financial inclusion in India (Source

every household with access to basic financial services, thereby bridging

2 Chapter 6 of this book provides a detailed discussion on Government’s initiatives on

In the absence of an official definition, inclusive banking has to be

Definition of Inclusive Banking

Inclusive Banking---Global Approach

strategize policy initiatives in this regard. It defined financial inclusion

Scope of Inclusive Banking

provision. In this sense, inclusive banking is the act of undertaking

Evolution of Inclusive Banking in India

Inclusive Banking - Overview of Recommendations by Various

Microfinance in 2005. In 2006, the Government of India constituted a

1. Internal Group on Rural Credit and Microfinance, 2005 (H. R.

4 The following discussion on committees and their recommendations is drawn from

Its recommendations have been forward-looking to manage the

doing away with agriculture interest subvention scheme, crop insur-