Skip to main content

Simpler Credit Rules on Way for Poor Households


Proposal includes lending of up to Rs 1 lakh per family without collateral at lower interest rates

The government is redrawing a micro-credit programme to help pull rural households out of poverty. The proposal is to lend up to Rs 1 lakh per family in the next threefive years, with the loans coming collateral-free and with subsidised interest rates.

ā€œWe have simplified the process for accessing loans ... We are getting into the details of livelihood each house can undertake so that the money can be lent accordingly,ā€œ said rural development secretary Amarjeet Sinha.

Nearly 8.5 crore poor households identified in the Socio Economic and Caste Census will be linked to the plan by 2019.

The government wants to double bank linkages to lend Rs 60,000 crore per year for creation of livelihood for deprived rural households by 2019. The aim is to reduce their dependence on local money lenders and microfinance companies who charge usurious interest rates as against 11% by banks. Under the new proposal, the interest burden on the borrower is much lower due to subvention.

The rural development ministry has signed a memorandum of understanding with the agriculture and animal husbandry ministry to enable lending to such households for activities including tilling and setting up of poultry farms and goat sheds.

The rural development ministry will provide an interest rate subvention of 4% to make loans available at 7%. Households in 250 backward districts will get an additional interest subvention of 3% on prompt repayment, making their effective interest rate at 4%.

ā€œWe want to create diversified livelihood opportunities by providing loans which will help households utilise their resources and skills,ā€œ Sinha added.

The government has, for instance, taken up expansion of dairy activities in several states by collaborating with the National Dairy Development Board to provide better market linkages and bring producer groups together with companies.

In order to expand its credit reach, the ministry is also studying the lending models of different states in rural areas, such as Tamil Nadu's Panchayat Level Federation and Telangana's Stree Nidhi Cooperative which lends to self-help groups.

Rural credit in India raised by selfhelp groups grew 40% in 2015-16 to Rs 30,000 crore. These groups have mobilised credit of about Rs 70,000 crore since they were formed in 2011, to fund creation of social capital in villages that could lift nonfarm jobs.

The Economic Times New-Delhi,19th April 2017

Comments

Popular posts from this blog

GST collection for November rises by 8.5% to Rs.1.82 trillion

  New Delhi: Driven by festive demand, the Goods and Services Tax (GST) collections for the Union and state governments climbed to Rs.1.82 trillion in November, marking an 8.5% year-on-year growth, according to official data released on Sunday. Sequentially, however, the latest collection figures are lower than the Rs.1.87 trillion reported in October, which was the second highest reported so far since the new indirect tax regime was introduced in 2017. The highest-ever GST collection of Rs.2.1 trillion was reported in April. The consumption tax figures highlight the positive impact of the recent festive season on goods purchases, providing a much-needed boost the industry had been anticipating. The uptick in GST collections driven by festive demand had been anticipated by policymakers, who remain optimistic about sustained growth in rural consumption and an improvement in urban demand. The Ministry of Finance, in its latest monthly economic review released last week, stated that I...

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   ā€œThe renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,ā€ said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...