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I grew up in rural India, where banks were non-existent. People kept the money locked up in houses or worse yet, lent to the local money lender, who may or may not pay on demand. The government in those days introduced postal savings plan, which helped people greatly. That was my introduction to banking as well. Here are some observations: 1. Banks were inaccessible to poor people. Too much paper work. Too far away. Too difficult to conduct business. I hope with new bank accounts all these are changing too. 2. Saving is not new. People save money; even poor people do save. But, then, if the savings are in women's hands, it is spent more wisely. Historically, the only way women could store the money was in gold. Eventually, gold itself because such a coveted possession, it's monetary value was not exploited for capital needs. Bank accounts may not have these problems. 3. Historically, the only reason rural folks went to bank is to take loans, under some government project. And, that had a big potential for corruption. People had to pay money to take the loans. The funny thing was the underlying assumption is that the borrowers need not pay money back, since the government will write it off, for some election purposes. 4. Money transfers for poor is new. I think that would work lot better. And, perhaps giving to women would make it work whole lot better. In my observation, there is lot of social and cultural conditioning in seeing the kids doing better than the parents, the mothers will try to put the money to use. Whether they have the financial education or not, different issue. 5. Any system will be exploited over time. I think it is important to shake them up every few years to disturb the existing power structures, especially in the relationship between the government and the people. |