India can sustains its growth momentum in current year; Bansal

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New Delhi, June 6 (UNI) Minister of State for Finance Pawan Kumar Bansal today expressed confidence that India can sustain its growth momentum in 2007-08 also, adding the country averaged 8.9 per cent in the last four years.

Addressing the 15th general assembly of World Savings Bank Institute (WSBI) here, he said India has long recognised microfinance as a tool for extending banking services to the poor to enable them save, invest and take credit to break the chain of poverty. Since there is hardly any non-performing assets (NPAs) in micro-credit, many more banks are increasing their operations in this area in a big way, he added.

Lauding the WSBI Assembly's theme of "Overcoming financial exclusion through microfinance", he said it is most relevant for inclusive economic growth, particularly in developing countries like India. "Access to finance by the poor and vulnerable sections of society, is a form of empowerment, that will help reduce poverty and bring these groups into the economic mainstream," he said.

Mr Bansal said the banking sector in India has recognised this imperative and has undergone fundamental changes in the last two decades. With various reforms initiated by the government, the banking system has become strong, healthy, dynamic and resilient - a necessary condition for sustained economic growth and financial stability, he added.

Mr Bansal added that the Regional Rural Banks (RRBs), Urban Cooperative Banks (UCBs) and Rural Cooperative Banks have been strengthened to enhance their capacity to reach out to the rural poor. But he said scheduled banks should also expand their reach to under-banked areas in semi-urban areas.

To achieve the objective, the government, since 2006, has been approving opening of any new branch subject ot the condition that at least half such branches are opened in under-banked areas, he added.

Mr Bansal said now "no frills or basic bank accounts" branches are being opened to provide basic banking facilities to people at low cost to banks and a number of such banks have reported 100 per cent financial inclusion.

He said microfinance institutions could also play a crucial role in broadening the access of financial services to various sections of society as many of them operate in a limited geographical area and have a greater understanding of issues specific to rural poor, enjoy greater acceptability and have flexibility in operations which gives a level of comfort to their clientele.

He said Self Help Group (SHG), which provides a good bank linkage programme, is a major plank of the strategy for delivering financial services to the poor in a sustainable manner.

As many as 2.92 million SHGs have been credit linked with banks, benefitting more than 40 million poor families in fiscal 2006-07, adding 80 per cent members of SHG are women.

But at the same time, the Minister admitted of enormous challanges in implementing the task of financial inclusion in a vast country like India with a large rural population. Inaccessibility, distances and lack of proper infrastructure also pose problems, he accepted.

UNI SAA SR RN1928

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