In June, Akola Zilla Parishad Chief Executive Officer Ayush Prasad managed a small yet significant victory. He ensured that 12 extremely poor households received a bank credit of Rs 12,000, so that these families could build toilets and claim the amount under the Swachh Bharat Mission. The trouble was, without the initial bank credit, they did not have the money upfront to build the toilet for themselves. Prasad’s intervention led to the 12 prospective beneficiaries of the Swachh Bharat Mission receiving Rs 12,000 each as bank loans. The beneficiaries could choose to use the money received from DBT to repay the entire principal amount, or pay it in EMIs. But the ZP’s persistence could help only 12 families when close to 6,500 families in the district were still to build toilets.
Heartened by one bank’s willingness to extend microcredit to such families to avail benefits of a government scheme or subsidy, the Zilla Parishad (ZP) has now requested banks to extend a line of credit to beneficiaries of all DBT-enabled schemes that require an upfront payment or contribution. A couple of weeks ago, in a letter to the lead bank manager for Akola, the district administration urged banks to extend such credit to prospective beneficiaries to ensure that nobody was left out of various Zilla Parishad-run government schemes.
The ZP administration and bank representatives discussed the matter. A representative of the Akola District Central Cooperative Bank said they view the request positively and will study how to accommodate bridge financing for prospective DBT beneficiaries. Of the nearly 500 listed DBT-applicable schemes of the Central and state governments, Zilla Parishads run about 32 — such as subsidy for purchase of tractors, harvesters, and sewing machines, etc.
Speaking to The Indian Express, Prasad said, “The government cannot give DBT in advance because of the fear of diversion of funds for other purposes, or non-utilisation of funds within the time period. The aim of seeking loans for beneficiaries of government schemes is to facilitate the uptake of DBT, prevent borrowing from unauthorised sources/moneylenders, and to help beneficiaries give their contribution to avail benefits”.
According to the ZP, no new loan product is to be created, for in the case of the 12 beneficiaries who in June received a credit facility from the Union Bank of India’s Akola city branch in order to construct toilets, the bank extended an available credit facility under the Pradhan Mantri Jan Dhan Yojana accounts to Rs 12,000, paid in tranches. It was low-cost credit facilitation instead of credit from informal sources or MFIs where the rate of interest would be considerably higher.