Social Banking: Perspectives and Experiences

Social banking may have different meanings around the world, but it always aims at helping the needy and uplifts the poor in society. This implies that banks must lend for a cause rather than for profits. It is “banking for the poor, rather than poor banking”. In developed countries, it is composed mainly of community banks that help the needy members of the same community, but in poor countries it has a much larger significance. In India, social banking had been the domain of nationalized banks for long, but, of late, even private banking companies have entered the field and proved that they can still make profits while serving a social cause. NABARD has been in the field of social banking for long, but the coverage of banking in the rural areas is very poor. Much needs to be done. Banks alone cannot reach every nook and corner of a large country like India, and the help of self-help groups, NGOs, private societies, microfinance institutions, etc., is required. The government has formed Regional Rural Banks, rural co-operative banks etc. But as social banking entails losses, these banks have started entering more profitable areas of banking and competing with the commercial banks in order to show profits in their financial statements. This has eroded the very concept for which they were formed. The book also narrates the case of Grameen Bank of Bangladesh and its contribution for the upliftment of poverty in the region. The methods used by its founder Mohammed Yunus in Bangladesh could be used in India in order to expand the reach of social banking.