Yunus point was that governments should not promote the concept of loan waiver, as people, irrespective of their economic means, must develop the habit paying back the loans.
You can give a cash grant instead to help farmers pay back the loan, but there is no doubt that waivers do not help, he said.
Yunus, founder of the Grameen Bank in Bangladesh in 1983, pointed to the banks recovery rate of more than 99% despite a crippling poverty ratio of 41% as per Unicef data. He attributed this to the banks insistence on recovery, by providing support services. The bank with more than 7.7 million borrowers has a turnover of $1.2 billion.
Yunus said a moderate rate of interest and a humane banking system that extended loan tenures were reason enough for the poor to stay invested.
For instance, each branch of the Grameen Bank transforms itself into a relief centre during any natural calamity and supports the borrowers in rebuilding their lives through fresh loans. If people get back on their feet the banks also become much stronger, he said.
Though the ruling UPAs Rs 64,000-crore agricultural loan waiver had received a thumbs-down from Yunus, he praised the National Rural Employment Guarantee Act, which he said was a better template to help out the poor. The model has been adopted by the Bangladesh government too.
He said the government should not stop providing 100 days of employment as stipulated under the Act but use the window to provide access to productive work for them. Otherwise, the support system would have to continue indefinitely.