The Hindu : New Delhi News : Banking sector has failed to meet targets for weaker sections

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Sunday, Nov 11, 2007
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New Delhi

Banking sector has failed to meet targets for weaker sections

Special Correspondent

JAIPUR: The banking sector in the country does not seem to be paying adequate attention to the flow of finances to Dalits and underprivileged sections and has failed to meet the priority sector credit targets for them. Whatever flow of funds is visible, it is for the implementation of various schemes. Making these observations, a new study on “Financial exclusion and the underprivileged in India” here has suggested announcement of special packages for credit disbursal to the Scheduled Castes and making them creditworthy by investing in their education, health and infrastructure.

The study, conducted by the newly appointed Director of the Institute of Development Studies (IDS), Surjit Singh, reveals that the much talked about economic reforms have reinforced financial exclusion of landless people belonging to weaker sections who would suffer the most in the current agrarian crisis and uprooting as a result of industrialisation and urbanisation.

Access to institutional credit is denied to a large majority of households located at the lowest rung of both the economic hierarchy and the caste-based hierarchical social stratification. At the scheme level, access is denied because of non-inclusion in lists like Below Poverty Line (BPL) at times and also because of social exclusion.

The study cites the National Sample Survey Organisation’s figures of 2005 to point out that 49.77 per cent of Scheduled Caste and 63.68 per cent of Scheduled Tribe farmer households were excluded from the formal financial system that included the provisions of savings, loans, insurance, payments and remittance facilities.

The participation of the Scheduled Castes as members of the Primary Agricultural Credit Societies improved from 13.5 per cent in 1978-79 to 33.18 per cent in 2003 to fall to 30.61 per cent in 2004. The Scheduled Castes’ share as borrowing members fell from 11.5 per cent in 2003 to 6.49 per cent in 2004, clearly indicating their continued exclusion.

Since 1993, the number of Scheduled Caste bank accounts declined sharply from 100.44 lakh to 72.62 lakh in 1997 and then to 61.61 lakh in 2001 and to 41.47 lakh in 2004. The study revealed that the figures showed a decline in the share as well as absolute numbers of Scheduled Castes. The number of women Scheduled Caste accounts also fell significantly from 21 lakh in 1997 to 11.3 lakh in 2004.

The average amount of outstanding loan per Scheduled Caste farmer household was Rs.7,167 compared to Rs.12,585 for all farmer households. The proportion of indebted farmers at the national level is 18 per cent, while the proportion of indebted Scheduled Caste farmers varied from 36.4 per cent in Uttarakhand to 4.5 per cent in Kerala.

Dr. Singh said the most important purpose of Scheduled Caste farmers obtaining loans was capital expenditure and current expenditure in farm business. For every Rs.1,000 taken as loan, Scheduled Caste farmer households borrowed Rs.446 for these purposes. The Scheduled Caste farmer households borrowed for education as well and it was higher than other social groups.

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