31 January 2009

Banking under Economic Crisis

It is now agreed, a la IAASTD, that 'Business as usual is no longer an option'. Lot of tax payers money is being infused to revive the global economy. However, bankers' who got used to doing business with larger players are taking time to get out of their usual mode of doing business. True, larger transactions reduces per unit costs but exposures are also greater. It is the excessive reliance on a few large players that is identified as one of the reasons for the current problem. The banks should consider wooing smaller players. This is a different ball game. It requires understanding, propagating and examining the viability of small projects. This can be done with poorest of poor people also. The understanding that doing business with poor will lead to losses is a myth. This has already been shown by Grameem Bank of Bangladesh (through the work of Nobel laureate Mohammad Yunus) and other similar experiments across the globe. Bankers have a stake in reviving the economy if they have to stay in business. The mantra is to do business with a large number of small entrepreneurs, but with viable economic projects. Small is Beautiful, see the E.F. Schumacher's Society. There is a vicious cycle of prosperity waiting. Please do not let the opportunity get out of hand. Grab it.

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