If the NPA is less than 1 percent, why Micro-finance company should charge 26- 31 percent interest on loan for Rs.2000 to Rs.30,000 ? It looks like another avatar of the village money lender. If in spite of such high rate of interest, poor people still take loan from these institutions, it is a total failure of our banking system to reach the poor. Most of the people are trust-worthy and credit-worthy but they are charged highest possible rate of interest. Indian Express had a series of articles how the big companies, who pay lowest possible rate of interest, loot the banks some years ago.
Banks were nationalized to serve the poor.It is reported that nearly 40 percent of our people do not have bank account even after 50 years of nationalization.
Credit is the most important tool to empower people who are self-employed. It encourages entrepreneurship and employment creation.In an interview, Prof.Anil K.Gupta, founder of National Innovation Foundation (NIF), says that NIF has a data base of 140,000 innovations, most of them school drop-outs and even illiterate. He says only 250 patent applications have been filed. Why these innovators do not get credit to make their innovations commercially successful ?
Credit should be the birth-right of every individual to improve tools of his trade either inherited or acquired later in an institute. A carpenter should be able to get the latest tools.A tailor should be able to get the latest sewing machine. Even a humble tea-shop owner on the road-side should be entitled to it as it not merely improves his trade but also people who drink his tea. With a little credit he can have stainless steel utensils and he can serve in a better cup. He can be persuaded to provide for cleanliness.All this would not merely improve the person concerned, but the society itself.
Credit should be available to the poor at the lowest rate of interest possible.It is not a subsidy but it is the foundation of prosperity of our people and the country.
( A response to a news item regarding micro-finance companies charging 26 to 31 percent interest on loan to the poor published by Karmayog.)
July 21, 2010.
**88
Banks were nationalized to serve the poor.It is reported that nearly 40 percent of our people do not have bank account even after 50 years of nationalization.
Credit is the most important tool to empower people who are self-employed. It encourages entrepreneurship and employment creation.In an interview, Prof.Anil K.Gupta, founder of National Innovation Foundation (NIF), says that NIF has a data base of 140,000 innovations, most of them school drop-outs and even illiterate. He says only 250 patent applications have been filed. Why these innovators do not get credit to make their innovations commercially successful ?
Credit should be the birth-right of every individual to improve tools of his trade either inherited or acquired later in an institute. A carpenter should be able to get the latest tools.A tailor should be able to get the latest sewing machine. Even a humble tea-shop owner on the road-side should be entitled to it as it not merely improves his trade but also people who drink his tea. With a little credit he can have stainless steel utensils and he can serve in a better cup. He can be persuaded to provide for cleanliness.All this would not merely improve the person concerned, but the society itself.
Credit should be available to the poor at the lowest rate of interest possible.It is not a subsidy but it is the foundation of prosperity of our people and the country.
( A response to a news item regarding micro-finance companies charging 26 to 31 percent interest on loan to the poor published by Karmayog.)
July 21, 2010.
**88
