Inefficient financial system cannot rescue people out of poverty

Any inefficient financial system cannot rescue people out of poverty because it will be passing on its increased cost burden to the people, said RBI, Deputy Governor, K.C.Chakrabarty. "Indian financial system including the micro finance is more tyrant than the money lenders because their operating cost is one of the highest." he said, while addressing "Conference on Corporate Governance in Micro Finance" organized by Indian Chamber of Commerce in the city, he further said, "that the moment you say there should not be margin cap, you are asking that I (organisation) should be allowed to be more inefficient." Specially referring to the micro finance sector Mr. Chakarbarty said, "Your corporate governance standard should be of much more higher standard because you are providing finance to the most vulnerable section of the society without any security." Furthermore he said, role of good corporate governance "is to ensure that inefficient, fraudulent, tyrant elements do not come into the system," if these elements penetrate into the system then crisis is inevitable, added Chakrabarty. He said, good governance lays more emphasis on viability and protection of customer rather than squeezing him to extract profits, as practiced in western countries.