New Delhi, Aug 24: At the India Banking Conclave (IBC), Swadeshi Jagran Manch co-convener Ashwini Mahajan advocated for the protection of the interest of poor especially on the issue of providing them small finances respectfully by institutional financing. How banking and NBFCs can help poor to get loans? What is the importance and utility of creation of Mudra and many other issues He spoke to OneIndia correspondent.
Excerpts of Ashwini Mahajan's interview:
Q. How do you see the condition of poor people in the country seeking financing?
A. There is a NABARD report on financial inclusion that is very interesting. According to the report which was prepared after doing a household survey of rural areas. It has found that there are 48 per cent agriculture households and 52 per cent non-agriculture households. Agriculture households have their average income Rs 8931 per month while non-agricultre household have Rs 7269 per month with an aggregate income of Rs 8059 per month per household. If you translate into per capita per person it gets translated into Rs 22000 but in the urban area it comes to around 2.69 lakh. So the income of the urban household is 12.5 times more. So you can well understand that how wealth is getting concentrated with handful people of urban area. You will be amazed to know that total income from farming in rural area is just 23 per cent. Now, you can understand the extent of poverty and deprivation in the rural areas among farmers. The quantum of distress is there but how much it will be able to get resolved? Important thing is that how to improve condition of poor in the rural area.
Q. There are non banking financial institution working there in the country, what role do you envisage for them? What role they can play for poverty alleviation?
A. See these NBFC, banks and even imagination behind creation of Mudra was that how can we create an ecosystem whereby small borrowers could be funded. Because RBI, its conditions and its regulations continued, they are the same for big and small. The same credit score and all were put forth so the small won't get anything. We thought with the creation of Mudra that something good will happen but from the very beginning RBI started that separate regulator does not emerge. So the original plan of Mudra got changed and it has been brought in under the RBI guideline. So Mudra is also working under the RBI guidelines.
Q. So the purpose for which it was created stands defeated!
A. Yes the purpose for which it was created was not fully met though certain changes like micro finance and refinance has become better. As far as refinance of NBFC goes, conditions are so stringent that neither banking nor NBFC doing refinancing as there is no growth of banks. Since there is no credit growth so they don't refinance. If credit growth is better then they need it otherwise they don't get refinance done. They are overladen with funds. NBFCs are not getting refinance done for the stringent condition they are faced with. Whatever refinancing is happening that is happening in other sector. The original Rs 20 thousand's allocation for refinance half of it has been given to stand up. So there is a need to give Mudra a big push. There is a need to develop an ecosystem where there is not the same guidelines which is for the big finance seeker because problem and solution of smalls are different. So the creation of different ecosystem was thought about. I hope with the restructuring of the board something like that happens.
Q. Aren't you suggesting the government on these issues the way you are saying that problem and solutions of small are different?
A. It is we who are making all the noise against it like providing the right value to the produce of farmers. They get right credit and right finance. People ask how to do it. They are obsessed with the idea that nothing could happen in the rural area therefore bring the rural population to the cities and their problem will be solved. What have you done for them in cities that they should come here. Is there employment for them in big cities. So from Arvind Subhramanyan to Arvind Pangariha, all the imported consultants say that crowd should come out of the rural area. But do they have idea of the urban areas. Per capita income that is 12.5 times more in urban area may attract people. In the era of technology location is not important. Develop ecosystem in the rural areas things will improve.
Q. A thought has emerged that lots of survey and research is happening in rural areas, so what are the opportunities there?
A. S P Gupta Committee gave its report long back that what could be the major area of employment generation in rural area but the report has been sent to trash. The present government has also not looked at it. We have suggested them to bring out that report make whatever changes you want but implement it. Kisan Credit card has been given to two such section which don't belong to the category of farmers. It has been given for animal husbandry and fishing. There is a need to extend it. Agricultural loans are given for non-crop and agricultural activities.