Make higher resources available to unorganised sector: Arun Jaitley to Banks

The SHG movement that started 25 years ago with a very few entities has now crossed the 85 lakh mark, he said. The repayment capacity of people associated with SHGs and availing micro-finance products is much higher, Jaitley said.

By: ENS Economic Bureau | New Delhi | Published:July 12, 2017 1:20 am
Arun Jaitley, employment, unorganised sector, NABARD, indian express news, india news, business news, banking news Finance Minister Arun Jaitley. PTI Photo

Finance minister Arun Jaitley on Tuesday asked banks and lending institutions to make higher resources available to the unorganised sector in the economy. “It is a fact that people in the unorganised sector are much higher than the organised sector, but the former gets credit with a lot of difficulty,” he said.

“If the resources of banks and financial institutions through various schemes are diverted towards this (unorganised) sector, it will help create more employment,” he said at a National Bank for Agriculture and Rural Development event. NABARD has completed 25 years of its financial inclusion initiative called self help group (SHG) bank linkage programme, which is aimed at delivering the savings and credit services to rural poor.

Jaitley said SHGs have been beneficial in generating lakhs of jobs in rural areas. Since most SHGs are women-led, these have brought in financial security for rural women, Jaitley said. The SHG movement that started 25 years ago with a very few entities has now crossed the 85 lakh mark, he said. The repayment capacity of people associated with SHGs and availing micro-finance products is much higher, Jaitley said.

Since its pilot stage in 1992, the SHG programme of Nabard has covered more than 10 crore rural families. “As on 31st March, 2017, these groups had savings of more than Rs 16,000 crore in banks and double of that amount in their internal lending. The programme had a catalytic effect in sourcing collateral free loans to the tune of Rs 61,000 crore to these poor women from the mainstream banking system at the normal rates of interest,” the finance ministry said in a statement on Monday.

Meanwhile, speaking on sidelines on the same event, former Reserve Bank of India Governor C Rangarajan said it could take at least one year for the resolution of non-performing assets initiated by the RBI especially for large accounts. The RBI last month directed banks to refer 12 troubled companies with a combined debt of around Rs 2.5 lakh crore for corporate insolvency resolution. He said the NPA clean-up exercise has to be done and some “haircut” in loan values is inevitable.

“With the haircut, loans should become performing. Some adjustment is needed. After all, we have always done one-time adjust in the past. The size of NPAs has become big so this step is required. Without finding solution to NPA, we will not be able to move forward in terms of stimulating economy and investment,” he said. On bank consolidation, Rangarajan said the initiative for merger should come from “banks themselves and there must be felt a need for it.” State Bank of India recently merged its five associate banks with itself. The finance ministry has indicated the scope for merging 3-4 more banks. He said India needs to have a variety of banks including large banks and small banks.

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  1. A
    Anandi Sharan
    Jul 24, 2017 at 7:27 pm
    Yes but at the same event Y C Nanda Former Chairman, NABARD, said “.. the focus shifted to increasing the number of linked SHGs rather than developing a sustainable, self-managed financial ins utional setup for the poor who were and never will be the favourite clients of traditional banks because of the low value of their transactions which do not generate profits or even meet the costs.” A better way forward not only for SHG members but for everybody is to transfer the function of creating the national money supply from private commercial and nationalised commercial banks as a source of private profit to themselves, to a public agency – the central bank – as a source of debt-free public revenue to be spent into circulation by the government for public purposes. In that case we would be paid from the public purse and for caring for each other and our purchasing power would add to trade and creation of livelihoods in the District and the country.
    Reply
  2. A
    ah
    Jul 12, 2017 at 8:13 am
    ye bhoot ke moonh se Ram kyon nikal raha hai???? bhaiya ab kisko oollooo banaoge??? inko 100 rupita deke bade udhyogo ya FDI waalw ko 10000 tow nahi doge na??? ............ inka BHAROSA hi nahi, kab Ayodyta bhi bech daale .....................
    Reply