Page 40 - Banking Finance July 2022

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"So, it was financial assistance that helped you," I asked to like credits/loans for farmers etc. What is arguably one of
confirm. She agreed and further elaborate that most poor the best benefits of the poor owning a bank account, apart
people irrespective of their livelihoods will need it to start from availing credit, is its complementary assistance for the
their journey of crossing the poverty line. Direct Benefits transfer scheme to be successfully
implemented and thereby avoiding the leakage of crores of
The success story of the Pudupu Sangams or the Women rupees intended for the farmers in earlier instances.
SHGs in AP has been the role model behind the National
Rural Livelihood Mission. Under this mission, nationwide It is no secret that the poor are entrapped by money lenders
efforts have been undertaken by the Ministry of Rural with exorbitant rates of interest charged on their borrowed
Development to build, manage and empower women Self sums. For people who depended on the outcome of annual
Help Groups. crops and seasonal employments, pressing requirements like
medical and food expenses and occasional expenditure
Though the women groups in AP have enough corpus to lend requirements for marriages and functions compelled the
to their members, the SHGs in other states depend on poor to reach out to the money lenders.
financial institutions like Banks, MFs, and NBFCs to finance
their projects. Banks, especially Public Sector Banks have The improvement in financing from Banks has considerably
played a pivotal role in financing SHGs thus far. The crux is reduced the headache of the poor. There is still scope for
to financially assist SHG members who would invest the improvements to bridge the gap between the poor and
money in income generating assets that would provide them Banks as far as availing credits are concerned.
a hand holding support to come out of the poverty line.
While the concern of the poor people is the cumbersome
Apart from financing SHGs, Banks have played a process involving heavy documentations, the Banks on the
commendable role in funding the financial requirements of other hand have their own concerns- the creditworthiness
Agriculture and allied activities. Designated as a priority of the poor. Most of the finances that Banks provide are
sector for the Banks, there is a stipulated percentage of the based on the business assumption that its repayment will
Annual Net Bank Credit (ANBC) which is allotted to be made on time. To ensure that the poor do not default, it
Agriculture and allied activities. Notwithstanding the inability is important that the credit availed is used for income-
of farmers to repay the loans during bad seasons and the generating assets. Thus, a sincere inspection work on the
politics involved with farm loan waiver, there are thousands part of the Bankers could help do away with documentation
of success stories of farm loans. concerns by making the process of credit delivery to the poor
more friendly.
The Pradhan Mantri Jan Dhan yojana, which earned the
Government of India (Department of financial services) a Are we then to conclude that having a Bank account will
Guinness world record for the maximum number of accounts transform a poor family's fortune overnight? It is often said
opened in a week, has raised many debates on its that poverty eradication is a multi-dimensional approach and
effectiveness in poverty reduction. that the poor have the ability and the knowledge to come
out of poverty. From the many testimonies of the poor, it is
While some are of the opinion that the mere opening of an evident that financing is one of the most important tools
account do not have any worthy contribution to the for rural development.
betterment of the poor, others feel that the erstwhile
financially illiterate people have become financially literate It will of course require many other efforts like ensuring basic
by not only familiarising themselves with the basic norms of necessities - good road, electrified house, drinking water,
banking but by also practicing it. etc. And while we acknowledge the rights of the poor to
decide on how best they could develop, one thing is for sure
Those in favour argued that saving habits have been that financial inclusion in its real sense would be one precious
inculcated and people became aware of financial products hand-holding support we can at the least offer.

40 | 2022 | JULY | BANKING FINANCE