Launching 1503 newly-formed self help groups (SHGs), jointly organised by the Mangalore-based Corporation Bank and Sri Kshetra Dharmasthala Rural Development Project (SKDRDP) at Kinnigoli, about 35 km from here, he said the regime would cover all banks and co-operative institutions.
Under the new scheme, a portion of credit should be made available to the rural poor, downtrodden and weaker sections of society. All banks should provide credit to poor borrowers, who were normally treated as non-trustworthy, he said.
The minister said one must stop the misconception that only rich people could easily avail loans to the tune of crores of rupees and that it was difficult for the poor people to get even Rs 1,000 as loan. The reality was that poor borrowers were more trustworthy than rich business houses and rich people, he said.
The microcredit system was the best credit system in which the poor and needy would get loans, as banks cannot directly provide loans to the poor, he said.
All banking and co-operative institutions must honour the policies of the government while providing rural credit. Both institutions should actively associate themselves with NGOs like SKDRDP, through which they could provide loans to the SHGs, Mr Chidambaram said.
The government has set itself a target of constituting 1.85 lakh SHGs by March 2005, he said, adding there were already 10.90 lakh SHGs and it was not difficult to reach the target.
The government had also set a target of forming another two lakh SHGs by next year (2005-06) and another two lakh in subsequent years, Mr Chidambaram said.
Under the government policies on banking, all banks should provide loans of up to Rs 7.5 lakh without collateral security to poor and meritorious students opting for professional courses in medical, engineering and biotech fields and also other technical courses, he said.
Last year, banks provided a total loan of Rs 80,000 crore to the agricultural sector. This time, the banks had been instructed to provide agricultural loans to the tune of Rs 1.05 lakh crore by end of March 2005, he said.