Micro-lending on the rise
Apropos of P Satish’s column “An urban surge in microfinance” (FE, September 28), the overwhelming success in micro-lending to the poor points to the fact that the poor are bankable. In spite of growing financial inclusion, the poor are still under the clutches of the money-lenders, and are forced to pay exorbitant rates of interest for the borrowings they have made from these unscrupulous money-lenders. Financial inclusion must cover all the excluded sections of the society comprehensively. The government must look at initiating stringent actions against the money-lenders charging exorbitant rates of interest and exploiting the poor people. The various state and religious organisations that are engaged in micro-lending to the poor through small groups need to be under a regulator’s lens to ensure that they are lending at affordable rates. Nevertheless, despite the services being rendered by the microfinance institutions, a large chunk of the poor are still some distance away from being able to access institutional credit. The government and the banking regulator need to be more aggressive in pushing banks and other financial institutions to remote areas. Providing banking and financial products and services at affordable rates, to suit the needs of poor segments of the society on an ongoing basis, will alone serve the intended purpose of micro-lending. Micro-loans that have become non-performing assets number very less, compared to institutional credit to other sectors. Micro-lending is a more viable business proposition as compared to other types of lending, and banks should give more priority to such loans.
VSK Pillai, Kottayam (Kerala)