Sunday, April 15, 2007
Minorities not getting bank credit in India: report
* Special body asks govt to provide financial aid, micro credit to five million poor Muslims over the next five years
By Iftikhar Gilani
NEW DELHI: A committee of top bankers here has found that both public and private sectors banks across India have failed to provide credit support to poor minority communities.
“Banks have been reluctant to provide credit to these groups because of poor credit worthiness and operational difficulties,” said the committee, which was set by up the government to recommend measures for the working and improvement of official National Minorities Development Financial Corporation (NMDFC).
An eight-member committee, led by Naseer Munjee, chairman of the Development Credit Bank, and including leading financial and baking experts was set up last July on the advice of Deepak Parekh, chairman of the HDFC Bank.
Presenting its 44-page report, the bankers have recommended to the government to provide financial aid and micro credit to five million poor Muslims over the next five years. They have recommended a micro-credit programme similar to Bangladesh’s Grameen Bank be prepared for minorities in India.
Arguing that access to capital is an important factor in the development and success of any enterprise, the committee found that minorities have not been able to obtain their share of credit from the nationalized banks according to their needs. The Reserve Bank of India, reviewing the prime minister’s 15-point programme in 44 minority concentration districts (59 bank branches), has also reported lack of thrust for increasing the credit flow to minorities by leading banks.
The panel found that the situation for minorities with respect to their credit access was so serious that against a 79.7 per cent account holders from the majority community, just 20.3 per cent among the minority community had accounts in public-sector banks. Strangely, in minority-concentrated districts the number of accounts of minorities was 26.3 per cent compared with 73.7 per cent other account holders. The amount outstanding against minorities was just 11.6 per cent compared with 88.4 per cent against other communities.
The panel has recommended that the key to success is not subsidy in credit, but access to money at a sustainable rate of interest. “What we should aim for is maximum impact at low subsidy,” said the chairman Naseer Munji.
It has also asked for a total overhaul of the NMFDC by infusing private capital to provide credit to minorities at competitive lending rates.
The committee has also recommended the setting up of a Waqf Development Support Agency under the NMDFC to explore partnership-financing opportunities.
The committee has further noted that despite the economic boom in the country, minority communities, who are mostly artisans engaged in occupations like handloom, etc, has to bear the brunt of the so called “competitive” forces unleashed by liberalization. It has called for the setting up of a new entity called “Minority Partnerships” company where the government would have 49 per cent and non-government bodies 51 per cent holdings. The company should invest in three major subsidiaries to operate in education, livelihoods and social infrastructure. It has asked to include institutions such as the Tata Trust, Aga Khan Foundation, Wockhardt, Wipro, Cipla and others to jointly subscribe to the share capital and be active supporters of the Minority Partnership programme.
http://www.dailytimes.com.pk/default.asp?page=2007\04\15\story_15-4-2007_pg5_2
Minorities not getting bank credit in India: report
* Special body asks govt to provide financial aid, micro credit to five million poor Muslims over the next five years
By Iftikhar Gilani
NEW DELHI: A committee of top bankers here has found that both public and private sectors banks across India have failed to provide credit support to poor minority communities.
“Banks have been reluctant to provide credit to these groups because of poor credit worthiness and operational difficulties,” said the committee, which was set by up the government to recommend measures for the working and improvement of official National Minorities Development Financial Corporation (NMDFC).
An eight-member committee, led by Naseer Munjee, chairman of the Development Credit Bank, and including leading financial and baking experts was set up last July on the advice of Deepak Parekh, chairman of the HDFC Bank.
Presenting its 44-page report, the bankers have recommended to the government to provide financial aid and micro credit to five million poor Muslims over the next five years. They have recommended a micro-credit programme similar to Bangladesh’s Grameen Bank be prepared for minorities in India.
Arguing that access to capital is an important factor in the development and success of any enterprise, the committee found that minorities have not been able to obtain their share of credit from the nationalized banks according to their needs. The Reserve Bank of India, reviewing the prime minister’s 15-point programme in 44 minority concentration districts (59 bank branches), has also reported lack of thrust for increasing the credit flow to minorities by leading banks.
The panel found that the situation for minorities with respect to their credit access was so serious that against a 79.7 per cent account holders from the majority community, just 20.3 per cent among the minority community had accounts in public-sector banks. Strangely, in minority-concentrated districts the number of accounts of minorities was 26.3 per cent compared with 73.7 per cent other account holders. The amount outstanding against minorities was just 11.6 per cent compared with 88.4 per cent against other communities.
The panel has recommended that the key to success is not subsidy in credit, but access to money at a sustainable rate of interest. “What we should aim for is maximum impact at low subsidy,” said the chairman Naseer Munji.
It has also asked for a total overhaul of the NMFDC by infusing private capital to provide credit to minorities at competitive lending rates.
The committee has also recommended the setting up of a Waqf Development Support Agency under the NMDFC to explore partnership-financing opportunities.
The committee has further noted that despite the economic boom in the country, minority communities, who are mostly artisans engaged in occupations like handloom, etc, has to bear the brunt of the so called “competitive” forces unleashed by liberalization. It has called for the setting up of a new entity called “Minority Partnerships” company where the government would have 49 per cent and non-government bodies 51 per cent holdings. The company should invest in three major subsidiaries to operate in education, livelihoods and social infrastructure. It has asked to include institutions such as the Tata Trust, Aga Khan Foundation, Wockhardt, Wipro, Cipla and others to jointly subscribe to the share capital and be active supporters of the Minority Partnership programme.
http://www.dailytimes.com.pk/default.asp?page=2007\04\15\story_15-4-2007_pg5_2
