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Call to boost mechanism to deliver credit to the poor

JAIPUR: The role of micro-finance in generating self-employment and facilitating poverty alleviation was highlighted at a two-day Annual Micro-finance Colloquium here over the weekend with a call to strengthen institutional devices to deliver credit to the poor and underprivileged sections.

Policy makers, economists, representatives of banks and financial institutions and key stakeholders deliberated on the status of the micro-finance sector in Rajasthan during the colloquium while taking note of the fact that the number of self-help groups linked with banks had gone up from 22,742 in 2003 to 1.37 lakh by March 2007.

The colloquium was organised by the Jaipur-based Centre for Micro-finance (CMF) to evolve a strategy for growth and expansion of micro-finance sector. CMF Executive Director Jai Pal Singh said the increase in terms of the amount of credit disbursed through SHGs in the State was from Rs.21.8 crore to Rs.144 crore during the past five years.

There are still 30 lakh to 40 lakh households in rural areas and 15 lakh urban poor having no access to financial services from formal or semi-formal sources. In this context, the micro-finance sector has a vast potential to address poverty and empower the poor, especially the women in the State.

Mr. Singh pointed out that many voluntary organisations had set up an institutional mechanism for sustainable growth of micro-finance in the State and some of them were in the process of setting up separate organisations for financial intermediation. A few SHG clusters and SHG federations have also been established in the State. A “Rajasthan Micro-finance Report-2007” released at the colloquium analysed the opportunities and challenges for financial inclusion of the poor. The participants said the report – the first of its kind – would act as a benchmark for the sector.

The subject matters of regional disparities and outreach of micro-finance services, quality and sustainability of SHGs, SHG-bank linkages and the livelihoods of the poor were discussed during the colloquium.

Noted economist V.S. Vyas said the mirco-credit movement should be supplemented with objective policy measures and development programmes to generate an effective demand for credit and raise absorptive capacity of the recipients.

Prof. Vyas also suggested that large micro-finance institutions and those accepting public deposits be brought within the purview of a decentralised regulatory authority. He said the interest rates charged to the poor should be reduced to enable them to run economically viable enterprises and earn remunerative livelihood.

Former Union Finance Secretary N.S. Sisodia and the Chairman and Managing Director of Bank of Baroda, Anil Kumar Khandelwal, in their addresses dwelt on the need to make the micro-finance movement geographically evenly spread, reduce the cost of credit and take the sector beyond meeting credit needs for consumption purposes alone.

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