14/10/08

does the priority sector include the marginalized?

the priority sector is a kind of a holy cow- even if a government thinks of rephrasing a line or two in the guidelines, it'd have a war on its hands. from p.sainath to muppala lakshman rao, a vast army of rishis and munis would be up in arms and pens. why? because these weaker sections need to be protected:
2.1.1 Units engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building does not exceed Rs. 5 crore.
2.1.2 Small scale units whose investment in plant and machinery (original cost) excluding land and building is up to Rs. 25 lakh, irrespective of the location of the unit, are treated as Micro Enterprises.
2.2.4 Loans granted by banks to NBFCs for on lending to SSI sector.
3.1 Loans granted to small business and service enterprises such as, Small Road and Water Transport Operators, Small Business, Professional & Self Employed Persons, etc. engaged in providing/rendering of services (which are industry or non-industry related), and whose investment in equipment (original cost and excluding land and building) does not exceed Rs. 2 crore.
3.2 (ii) Advances granted to private retail traders with credit limits not exceeding Rs. 20 lakh.
6.Educational loans should include only loans and advances granted to individuals for educational purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and not those granted to institutions.
6.1Loans up to Rs. 15 lakh, irrespective of location, for construction of houses by individuals, excluding loans granted by banks to their own employees.
1.1 Domestic scheduled commercial banks having shortfall in lending to priority sector target (40 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher) and / or agriculture target (18 per cent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher) shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD. The concerned banks will be called upon by NABARD, on receiving demands from various State Governments, to contribute to RIDF.
among those prioritized borrowers, do you recognize anyone who makes rs. 20 or less a day? in the rbi guidelines, bunched together with those weaker sections are these weaker sections:
(a) Small and marginal farmers with land holding of 5 acres and less, and landless labourers, tenant farmers and share croppers.
(b) Artisans, village and cottage industries where individual credit limits do not exceed Rs. 50,000.
(c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY).
(d) Scheduled Castes and Scheduled Tribes.
(e) Beneficiaries of Differential Rate of Interest (DRI) scheme.
(f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY).
(g) Beneficiaries under the Scheme for Liberation and Rehabilitation of Scavangers (SLRS).
(h) Advances to Self Help Groups.
(i) Loans to distressed urban/rural poor to prepay their debt to non-institutional lenders, against appropriate collateral or group security.
who do you think gets better attention from the banks? most of the second category of borrowers do not even have bank accounts, as i pointed out in this post. only 13% of the most vocal section of the second category (small and marginal farmers) have managed to secure occasional credit from the banks (read the opening paragraph of the 'report of the working group on the competitive micro credit market in india', prepared by the development policy division of the planning commission) until now. how would you rate the chances of anyone from the other sections in the second, real, category of obtaining, say, an occasional loan of rs. 20 or so from a public sector bank?

1 comment:

ray said...

Hi ,

I was reading ur blog posts and found some of them to be very good.. u write well.. Why don't you popularize it more.. ur posts on ur blog ‘kufr’ took my particular attention as some of them are interesting topics of mine too;

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Cheers,

 
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