UK: Banks Must Be Forced To Serve Poorer Communities
Rahman, K.

Thamesmead, a sprawling area of mainly social housing in south-east London, has approximately 40,000 households – but not one bank branch. There is evidence of high-cost lenders in the area and, according to Trading Standards Institute, about 1,500 people are regularly using loan sharks. 

Places such as Thamesmead were highlighted last week by the Better Banking Campaign as part of a problem that saw nearly 60,000 businesses denied access to finance last year, and around 2 million people without a bank account. So far, nearly 200 organizations – community and antipoverty groups, ethical investment funds, think-tanks, activists, and alternative finance organizations, including Fair Finance – have signed up to the campaign, which is trying to highlight the growing impact of the loss of financial services in some of our poorer communities.

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26 Feb 2010

Banks need to be monitored

When free market mechanisms manages to help one economic segment prosper at the loss of another, governments need to step in. Some major banks were nationalized in Pakistan in the 1970s because the banking sector had saturated distribution networks in urban areas while the rural sector had none. 40 years after that move, only 7% of the population has access to the traditional banking sector. This post also reminds me of the ongoing debate about the Robin Hood Tax in UK. Again, banks are reluctant to take part in the development objectives of the government. The free market economy has its errors, and I think governments need to enforce certain rules to ensure the gap between the rich and poor narrows down over time.

Fehmeen Khan Pakistan

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