The Hindu : 5 p.c. micro credit target for PSBs

Online edition of India's National Newspaper
Wednesday, Feb 20, 2002

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5 p.c. micro credit target for PSBs

By Our Special Correspondent

NEW DELHI, FEB. 19. The Union Minister for Social Justice and Empowerment, Satya Narayan Jatiya, said today that the Government has set a target for the public sector banks to use 5 per cent of their net advances for delivering micro credit.

Opening the National Conference on `Micro-Credit: Impact on Lifeworld', Dr. Jatiya said a resolve had been made by the Government to commit 5 per cent of the public sector banking's net advances for providing micro credit and these institutions would have to strive to achieve the target necessarily. Further, the Government had decided that loans up to Rs. 25,000 would be made available to poor on a large scale.

Several measures, he said, had been initiated by the Government to streamline the micro-credit delivery system. Emphasising the need for review of the credit lending facilities from the view point of social justice, he said during the last decade the rate of micro-credit lending to weaker sections declined from 9 per cent in 1991 to 7.2 per cent in 2000.

Recognising the positive impact of micro financing on the living conditions of the poor, the conference aims at focusing on credit needs of the rural people. The idea is to further evolve a rural credit delivery system to address the two main problems of high transaction costs and poor repayment performance.

A suggestion under consideration by the conference is whether linking of self-help groups and NGOs with mainstream financial institutions could help reduce the transaction costs and ensure better repayment performance.

It has been emphasised that while re-designing the rural credit delivery system not only the quantum of credit should be taken into account but also the nature of the credit demand that would be more diversified and widely dispersed.

The conference organised by the National Scheduled Castes Finance Development Corporation and attended by representatives of the national and international donors, expressed satisfaction over considerable progress in decentralistion of rural credit made in Kerala and West Bengal.

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