Rural credit delivery must change
The government needs to draw up a fresh blueprint for the structural transformation of the rural credit delivery system in order to streamline it, social justice and empowerment minister Satyanarayan Jatiya said while inaugurating the national conference on "Micro-credit impact on lifeworld".
The minister said that efforts to streamline the micro-credit delivery system should involve the appointment and active involvement of agents, self-help groups and NGOs.
He said the sector would be one of the focuses of the Budget.
Describing this as an "innovative modality," Jatiya said that the government, as part of its attempt to make the delivery system more efficient and targeted, had resolved that public sector banks will have to meet the target of 5 per cent of net bank credit for delivering to micro-credit. Also, it had decided that loans up to Rs 25,000 would be made available to the poor on a large scale.
In the last decade, the rate of micro credit lending to weaker sections had declined from 9.7% in 91 to 7.2% in 2000. In view of this, it had become imperative to review the credit lending facilities from the point of view of social justice, the minister said.
He referred to the Rs 32 crore made available to the National Scheduled Castes Finance and Development Corporation for advancing micro-credit during the last one and half year.
The conference itself underlined the need for micro-credit to focus on the number of hi-tech segments that have recently emerged in the rural sector as growth centres, such as floriculture, aquaculture and tissue culture. Vermiculture could also attract investments for commercial production of vermi compost.
Emphasising that non-farm employment in rural sector should also receive due attention, the conference referred to renewable energy projects such as the wind energy exploitation in Tamil Nadu also came in for mention in rural development and the need to identify a wide range of non-farm produce such as exploitation of forest produce.
As per RBI guidelines, public sector banks have to provide 40 per cent of net bank credit to priority sectors, which include agriculture, small industries, retail trade and the self-employed.
Within this overall target, 18 per cent of the net bank credit has to be in the agriculture sector and another 10 per cent to the weaker sections. However, PSBs have defaulted on the stipulations for most the 1990s.
Despite the effort made in the Union Budget of 96-97 to correct the situation regarding rural credit, the sub-targets of credit to agriculture and weaker sections continue to remain unattained, the two-day conference under NSCFDC observed.
Back to Feb News Archive