Prime Minister Narendra Modi on Thursday asked the banking sector to start lending to the underprivileged including poor farmers, poor students and people running small businesses so that their financial condition could improve which will ultimately contribute to India’s economic growth.
“You must come out with innovative financial inclusion instruments to ensure that the farmer does not commit suicide due to lack of bank funding,” Mr. Modi said.
“Our poor students need bank loans to pursue quality higher/technical education and training to be skilled. Lending them can be the biggest financial inclusion. I can assure that you will not see the current Non Performing Asset (NPA) level as these hardworking people will surely return your money,” the Prime Minister said.
He was speaking at a conference on financial inclusion organized here to celebrate the 80th anniversary of the Reserve Bank of India (RBI).
Mr. Modi said over five crore people engaged in small times businesses need an average loan of Rs. 17,000 to scale up and enhance their income. And the banking system must consider lending them. He said government will shortly launch the MUDRA Bank in this regard.
I know what it means to be poor: Modi
Mr. Modi urged the RBI to set milestones for financial inclusion over the next 20 years so as to transform the lives of the poor.
“I have come here to ask for something as a representative of the poor, marginalized and tribals; I grew up as a poor and I know what it means. I seek help on their behalf and trust you will not disappoint me,” Mr. Modi said while making a strong case for the poor to be provided with all sorts of banking services.
The Prime Minister said the success of Jan Dhan Yojana and the Direct Benefit Transfer of LPG subsidy had shown the potential of the enormous role that the banking sector can play in ensuring financial inclusion.
Mr. Modi said there was need for geographical inclusion as well. He said eastern India, despite endowed with vast natural resources has been greatly neglected by the banking sector and time has come for the banking sector to unlock this immense economic potential.
He also urged RBI to take the lead in ensuring that India starts to manufacture the paper and ink that are used to print currency notes here.
Appreciating the role played by RBI over the last 80 years, the Prime Minister complimented RBI Governor Raghuram Rajan for his grasp and clarity on economic issues.
Dr. Rajan while welcoming the Prime Minister said perhaps the country’s most important financial challenge is to bring financial services to every doorstep and to every small enterprise. The poor are still too far away from, or too uncomfortable stepping into, bank branches, he said.
“With government initiatives, as well as new technologies, I am confident that our country can empower the poor and the small with both choice and opportunities. The Reserve Bank in turn has to ensure greater consumer protection and consumer literacy,” Dr. Rajan added.