The formal institutions include banks, Microfinance Deposit-taking institutions, Credit Institutions, Insurance companies, Development Banks, Pension Funds and Capital Markets. The semi informal institutions include SACCOS and other Microfinance institutions, whereas the informal ones are mostly village savings and loans associations. Formal institutions are less prominent in rural areas than urban areas and they only serve 14% of the rural population.
This means we have to increase domestic demand, while avoiding the booms and busts that typically plague such efforts by emerging markets. My focus in today’s talk will be on what the RBI is doing to help the Government create the conditions for sustainable growth.