Banks not eager to give loans to rural sector

Oct 2006
India , October, 23 2006 - Criticising major banks for their reluctance to provide loans to rural people, rural development minister Raghuvansh Prasad Singh has said the UPA government will provide banking and insurance facilities to small farmers to bring them into the national mainstream

“Banks have not shown the required zeal to popularise micro-credit schemes in rural areas to help small farmers and artisans. Now 4,200 bank branches have been identified and their list has been sent to the finance ministry,” he told BBC during a special programme Aapki Baat BBC ke Saath. Singh said both the finance ministry and the Reserve Bank of India had directed these banks to accord top priority to Kisan credit card scheme and provide loans to small farmers.

“We admit there is scope for improvement in micro-credit programme for small farmers and poor people in rural areas,” he said. The minister said the UPA government was committed to generating productive self-employment in rural areas.

“We aim to open bank accounts for poor workers presently working in National Rural Employment Guarantee Programme,” he said adding that the government would also accord “top priority” to bring the rural people under life and health insurance schemes.

Rejecting the argument that non-recovery of loans from small farmers and poor people in rural areas was the reason for banks’ reluctance to provide loans to people in rural areas, Singh said “facts speak for themselves, and wrong propaganda cannot be used to deny the rural people their rights.”

He said the fact that there had been over 90% recovery in cases where loans had been taken by self-help groups and even small farmers, showed that they were sincere in replaying their loans.

“Banks would have to play a major role in removing unemployment from the country and especially the rural areas. Self-help groups and micro-credit financing is the key to solve the problem of poverty in rural India,” he said.

Expressing concern over farmers’ suicide, singh said it was a matter of shame that farmers had to take the extreme step due to non-payment of loans.

“We have now decided that the loan amount of small farmers would be doubled and the entire system institutionalised so that poor farmers are not forced to go to private money lenders, who resort to inhuman methods for recovery of their loans,” he added.


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