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We envisage for the Indian financial system, a policy framework that allows multiple strategies and institutions, new and old, to co-exist with each other, enjoying the freedom to thrive based on their inherent strengths and weaknesses.

Dvara Research is committed to work towards its vision of a well-functioning financial system for India that is built on three fundamental pillars: High Quality Origination, Orderly Risk Transmission and Robust Risk Aggregation, such that there is full financial inclusion and financial deepening in a manner that enhances systemic stability. A well-functioning and resilient financial system needs a good mix of institutions that collectively meet the financial intermediation needs of the country, be it individuals, households, businesses, sectors and local governments, while simultaneously enhancing the stability of the system as a whole.

India is a very large and diverse country and therefore no one strategy, however well designed, can be uniformly effective in serving the entire country. There is therefore a need to move away from a limited focus on any one model as being the solution, to an approach where multiple models and partnerships are allowed to emerge – between national full-service banks, regional banks of various types, non-banking finance companies (NBFCs), and financial markets, as well as a whole range of new functionally differentiated participants that can be envisaged to be created to fill existing gaps. The financial architecture must seek to encourage the emergence of specialists and enable greater partnerships between specialists. We envisage for the Indian financial system, a policy framework that allows multiple strategies and institutions, new and old, to co-exist with each other, enjoying the freedom to thrive based on their inherent strengths.

Since 2008, when Dvara Research was founded, it has made several contributions to the Indian financial system. Dvara Research has participated in several policy-making platforms such as the Reserve Bank of India’s Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households (CCFS), serving as the technical secretariat to the committee. Dvara Research has also worked with the Government of India’s High Power Expert Committee on Urban Infrastructure and Services, and the Committee to Review Implementation of Informal Sector Pension. Dvara Research has been closely involved in the evolution of the pension product for informal sector workers (NPS-Swavalamban) and advises the Pension Fund Regulatory and Development Authority of India (PFRDA) on the same. We also organise and host the Financial Systems Design Conference, the proceeds of which are below:


This paper seeks to lay out a set of ideas that look at root causes of bank performance, which will then pave way for the modernisation of the sector. At the heart of these recommendations is an attempt to go back to first principles of banking and to reflect on what banks’ management and boards (notwithstanding their ownership patterns), and the banking supervisor need to focus on in order to set the course for a globally competitive banking sector for India.

Modernisation of India’s Banking Sector, George, 2016

In this paper, we attempt to develop a granular understanding of the relationship between credit (as measured by total bank credit outstanding in a district) and economic growth (as measured by Gross District Domestic Product) for 32 districts of Tamil Nadu. Analysing data for these districts from 2004-05 to 2011-12, we compute the output elasticity of credit depth at the district level, while controlling for exogenous factors such as rainfall, infrastructural development, and other factors. We find that the responsiveness of output to changes in credit depth vary widely from district to district. Taking this into consideration, this paper provides a novel methodology for decision-making on optimal credit allocation towards districts.

Determining Optimal Credit Allocation at a District Level, Kumar & Baby, 2016

This note assesses the state of the Indian banking system including its small overall size and high concentration risk, poor indicators of financial inclusion and depth, opaque balance sheets, weak profitability, and highly covariant strategies followed by government-owned banks. It further highlights “mega-trends” that are shaping the future of banking in India and also recommends a number of strategies for change.

Improving the Competitiveness of the Indian Banking System, Ananth & Sukumar, 2013

This note highlights the need for active and deep debt capital markets, both fixed income and derivative markets in India.

Improving the Competitiveness of Indian Debt Capital Markets, Mukherjee, 2013

This note estimates the costs involved in delivering rural credit across five dominant channels: Public Sector Bank lending through its rural branch; Public Sector Bank lending through a Self-Help Group; Public Sector Bank lending through a Micro Finance Institution; Private Sector Bank lending through its rural branch; and Private Sector Bank lending through a Micro Finance Institution. The note analyses each component of cost separately: cost of debt, cost of equity, transaction costs and loan loss provisions, and ascertain their contribution to total cost of credit.

Cost of Delivering Rural Credit in India, George & Sahasranaman, 2013