Unfunded to be funded with dignity but bottleneck seems continuing
New Delhi, Aug 24: The government has always been concerned about the funding of the sector that remained unfunded due to many reasons and despite certain changes taking place certain guidelines by regulators have been marring chances of small entities to get funded. Right from the rural areas to urban employment scenario, small formers, workers, street venders and many other such workers you name form 93 per cent of the total work force of the country facce the hard time. And mostly they remain unfunded. However, RBI defined micro funding in 2000. There are 3.5 Micro Finance Borrower in the country.
Ashwini Mahajan, co-convenor, Swadeshi Jagran Manch, said that actually the big and small will have to grow together as without the growth of small, the growth of big is not possible. Most of the small borrowers live in the rural areas. And a NABARD report on Financial Inclusion which gave reveling Data about the disparity of rural and urban divide that needs to be plugged.
Mahajan asked that If you really want financial inclusion, funding the unfunded and banking the unbanked are equally important and with the help of Jan Dhan Yojana this was tried to be done. But still why at all we envisage Mudra Bank? Because the government wanted small could be funded in the honourable manner as other banking sector don't treat small venders well.
Raman Agrawal, Chairman Finance Industry Development Council, said, "Non-banking Finance Company has always funded the non-funded and had this was not been happening the sector would not have grown that much as it is today. Non-Banking Financial Corporation is 18 year old by now. The industry is around Rs 22 lakh crore and its average growth has been 15 per cent average growth."
Agrawal said that net profit flexibility was the most important element. It is because of the structure and there is some kind of rigidity in funding the unfunded. Collateral is the big issue with poor people. They won't have any CIBIL record so the funding becomes an issue. World over the biggest challenge has been asset creation but leasing has provided solution to it but in India leasing is heavily taxed. Now with GST in place so the leasing has started emerging in India as well. This needs to be encouraged.
Mahajan obseved that so what if the poor people don't have credit history but they surely have credit worthiness.
M V Nair, chairman TransUnion CIBIL said that this engagement was becoming attracting to lenders. One million new credit seeker this year to be added with no lending record. With GST in place clear formalization is happening. There are registered 51 million MSME unit out of that 5 million have been extended credit. However, 60 per cent still waiting for finance to be extended to them. But MSME and retail are going to be the best places to lend in the days to come in next ten years.
B K Mani, Mudra Bank, said that financing small lender has over seven decade old history. Today score of a person has become his/her collateral. MSME lending is embedded in cooperative, bank nationalization, Nabard and Self Help Groups.