At a time when companies such as Kingfisher Airlines and Suzlon Energy have defaulted on bank loans,finance minister P Chidambaram on Tuesday made a strong pitch for individual borrowers with low income,asking banks and financial institutions to not hesitate in giving loans to them.
The poor in India are not bad borrowers. The poor in India are not dishonest borrowers. The poor in India are ethical,honest are deserving borrowers. Therefore we must lend more to the poor, Chidambaram said at a function.
He added that big corporate houses could easily get loans of Rs 1,000 crore,but small borrowers still have to chase banks for loans.
In fact,a big business house can easily raise a thousand crore rupees. They can even not pay their loans. If you are a small borrower you go after the bank and if you are a big borrower the bank goes after you, he said.
Chidambaram said that if a corporate borrower fails to pay the loan,it is the bank which suffers,not the borrower. But that is not so for the poor borrower. There is no margin of error for him. The small borrower has to borrow small amounts of money,pay what may appear to be a higher rate of interest,make money,repay the loan in time because otherwise he will not get the second loan, he added.
Chidambarams comments come at a time when a consortium of 17 banks is facing default in a Rs 7,500 crore loan to debt-ridden Kingfisher Airlines. The airline with a loss of Rs 8,000 crore has not serviced loan payments since January this year.
Need more reforms
The finance minister,concerned over the difficult economic situation,on Tuesday said that the country cannot afford to make more mistakes and made a case for accelerating reforms to promote growth and contain the fiscal deficit.
We do face difficult situation today and I think what is important that we do not make any more mistakes… we (need to) quickly get back to the path of fiscal consolidation, Chidambaram said at a function. Every aspect of Indias economic life requires reform. Yes,we can discuss what reforms are necessary,what are unnecessary… what reforms are priority and what reforms are not, he said.