October 15, 2015 8:43:08 pm
Reserve Bank of India Governor Raghuram Rajan reiterated Thursday that financial inclusion might be pushed to such an extent that it may in the long term be harmful.
“That’s a leading question, right?” Rajan joked when asked about the issue at a press conference in Aizawl, before adding, “That is something that we have been trying to worry about especially in the micro-finance sector.”
The RBI Governor sounded a similar note of caution in Lima, Peru, a week ago on the sidelines of an IMF-World Bank meet. “As you know there was a problem in Andhra Pradesh of multiple lenders to the same entity. And that is why there is a requirement that when any entity lends it should register that loan to the credit-information bureau so that there shouldn’t be more than two lenders to any borrower and there is also a cap in terms of how much the borrower can borrow,” Rajan said.
“So yes, there is a potential problem of perhaps giving people too much more than they can handle which then leads to a debt cycle which can be problematic,” he said.
He however added, “This is a problem in some areas of the country and in other areas they dont get any access, and there the problem is getting them access in the first place. So we need to deal with both problems at the same time.”
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.