This overview of rural credit in 20th century India finds a remarkable continuity in the problems faced by the poor throughout the period. These include dependence on usurious moneylenders and the operation of a deeply exploitative grid of interlocked, imperfect markets. We articulate the theoretical and historical case for nationalisation of banks and provide evidence of its positive impact on rural credit and development. Certain excesses led to the reforms of the 1990s, which did increase bank profitability but at the cost of the poor and backward regions. While the microfinance institution model is unsustainable, the self-help group-bank linkage approach of MF can make a positive impact on security and empowerment of the disadvantaged. Much more than MF is, however, needed to overcome the problems that have persisted over the last 100 years.
