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Abstract
India is home to 21 percent of the world’s unbanked adults and about two-thirds of South Asia’s (Global Findex Database report 2014). Albeit, government also interfere to address flaws and disappointments in the regulated financial institutions. But subsidized government interventions also come out as a failure mainly due to inefficiency in execution and presence of asymmetry information. No doubt, that problem associated with informational asymmetries, moral hazard, and adverse selection is difficult to interpret for the design of specific policies and institutions. Thus, disappointment with the effectiveness of formal financial systems in fostering economic growth has diverted towards reevaluation of the role of informal financial institution as a medium of mobilization and allocation of resources.