RBI's tech group to review legislative governing money lending

Mumbai, Apr 18 (UNI) Reserve Bank of India (RBI) today announced the setting up of a technical group to review the efficacy of the existing legislative framework governing money lending and its enforcement machinery in different states and make recommendations to state governments for improving their legal and enforcement framework in the interest of rural households, mainly the small farming community.

The review would be made in the wake of findings of a recent survey by all India debt and investment that the share of money lenders in total dues of rural households increased from 17.5 per cent in 1991 to 29.6 per cent in 2002, RBI said in its annual policy today.

Concurrently, the Central Bank has also constituted a working group to suggest measures for assisting distressed farmers including provision of financial counselling services and introduction of a specific credit guarantee scheme under the existing Act for such farmers.

Despite the spread of banking facilities in rural areas and availbaility of bank finance at reasonable rates, RBI observed that farmers in several states are still in distress in respect of their debts.

In view of this, RBI has permitted the regional rural banks (RRBs) to open and shift offices after obtaining clearance from the empowered committee and has also empowered them to operate in foreign exchange business on case to case basis.

It also emphasised the need to revive the rural cooperative banking institutions and long term cooperative credit structure for providing cost effective services to the rural economy.

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