The Parallel Structure of Formal and Informal City Financial Institutions in India -- Expression of a Dual Economy?

This article examines the urban & rural informal financial structures in India in an effort to demonstrate that the so called traditional, indigenous finance intermediaries & financial institutions undergo continuous development & adaptive processes that allow them to be dynamic factors for certain branches instead of a static limiting element of economy & society. As a result of the various forms of relationship between formal & informal financial structures, informal financial structures remain despite the massive growth of banking. One explanation is the apparent complementarities of these structures with respect to services, orientation, & market flexibility. Even developmental politics have recognized the potential of informal financial intermediaries with upgrading & linkage concepts gaining notice. The differentiation process of previous informal financial intermediaries embodies modern forms in that the organization facilitates specific reactions to modernization & adaptive pressures of the operating environment despite various protective efforts. These players & institutions should receive the chance to help reform the financial structures & should be taken seriously as competitive developments. Tables, References. L. Reed