Policies over the years have attempted to ensure adequate flow of credit to these sectors, but based on commercial terms and in a non-micro regulated manner. Fourth, public policy has infused greater competition in the banking system by permitting entry of private sector banks. This has given a wider choice to customers (both lenders and borrowers) to approach their bank of choice.
At the same time, it has created an incentive mechanism for banks to enhance their efficiency. Fifth, at the same time, public policy has, by and large, preserved the branch network of the banking system to ensure that banking services continue to reach the remote corners of the country.