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Chapter 8 examines the role of private sector in the post-1991 period with reference to the Indian banking sector. Empirical analysis reveals that the private sector is increasing its share although public sector banks still dominate the Indian banking sector. Private sector banks including foreign banks are also showing their impact on the sector in terms of improving the efficiency of public sector banks, and reducing their operating expenses and non-performing assets. Notwithstanding numerous policy measures such as priority sector lending, Indian banks—public as well as private sector banks-are yet to expand financial access to agriculture and small enterprises.

The last chapter recapitulates the salient features and summary of findings of the study and suggests some policy measures that enhance financial access to real sectors. Empirical analysis of the study clearly indicates that the unorganised segment covering agriculture, micro and small enterprises (in industry as well as services sectors), has limited financial access with wider financial resource gap. The often-cited reasons for the limited financial access of the unorganised segment are—high risk and transaction costs. Hence, solution lies in reducing risk and transaction costs. Majority of the existing policies including priority sector lending do not focus on reducing risk and transaction costs. Microfinance institutions (MFIs) are yet to prove themselves in this respect. These are possible only through the encouragement of local area banks, innovative products linking borrowings to savings and insurance products and either removal of priority sector lending or issue of priority sector lending certificates.

The contribution of small firms in employment and earnings has been a significant concern for policymakers in developing countries. Many policy instruments have been employed to promote the growth of small firms in developing countries. India too has historically supported its small-scale sector and promotion of small-scale industrial sector gained significant importance as an element of industrial policy in India since Independence. These support policies and programmes have spawned considerable amount of literature documenting them and debating on the real effect of these policies, especially the protective measures on small firms. This chapter presents a thematic review of these studies and argues that there have been considerable changes in the policies and programmes supporting the small firms in the Indian manufacturing sector, especially since the onset of economic reforms of 1991.