Srinagar: Jammu and Kashmir Finance Minister Haseeb Drabu criticized banks and financial institutions across India for their laziness by not lending to small enterprises thus pushing a sector that produces 45 percent of the manufactured output, backwards and discouraging entrepreneurs.
The Micro Units Development and Refinance Agency (MUDRA) scheme, Drabu said was an indictment of banking sector and financial institutions for which Prime Minister had to intervene by introducing these social intervention schemes and economic initiatives.
“Need of Mudra should not have arisen in first place. It is indictment of banking sector today that Prime Minister of a country has to intervene to get them to lend to small businesses at 11 percent. Isn’t it part of normal banking business otherwise?” said Drabu while addressing a MUDRA promotion campaign in Srinagar organized by the J&K Bank.
“We (the banking sector) have got used to very lazy kind of banking where we want to do corporate loans at very high rates without breaking our backs by doing small lending at small places. What Mudra seeks to address is credit imperfection in the economy because of lazy banking,” said Drabu. The banking sector of India, senior PDP Minister said, has to understand that schemes like Mudra are an attempt to sensitize them about the fact that entrepreneurs fail due to social and domestic compulsions.
“There are 26 million small enterprises in India that generate 45 percent of the manufactured output in India and contribute to 40 percent exports. They employ 60 million people. But they just get 8 percent credit and that is the core issue. Their credit to GDPratio is less than three percent. That is where the problem lies. Mudra is effectively to cover up for the inefficiencies caused by this lazy banking system,” said Drabu.
MUDRA was launched in 2015 to develop micro enterprise sector in the country and achieve the goal of ‘funding the unfunded’ by addressing the issues inhibiting the flow of credit to micro industrial units in holistic manner. The scheme aims at employability and not employment and is seen as a game changer at grassroots aiming to support and finance around six crore entrepreneurs across India.
Union Minister Dr Jitendra Singh, while addressing the gathering claimed that the schemes like MUDRA had to be introduced because of inefficiency of previous governments and their unwillingness to work for the poor.
“India had to wait for 70 years for Modi to become PM. What has made all this difference and schemes like MUDRA a success is because of the credibility and trustworthiness of the PM and his government,” said Singh. This government Singh said was dedicated to poor and has also given a freehand to economists like Drabu to operate and bring in changes for these sections of the society.
“The present government gave importance to peripheral states. We cannot have GDP of India growing simply on growth of western states but the northeastern states and northern hill states have to move along,” he said.
The J&K Bank chairman Parvez Ahmed also informed that the banks in the state have already disbursed an amount of Rs 1000 crore to 41000 beneficiaries in the state against the annual target of Rs 2433 crore to 1.18lakh beneficiaries. “The banks and financial institutions of the state are committed to Parvez Ahmed also informed that the banks in the state have already disbursed an amount of Rs 1000 crore to 41000 beneficiaries in the state against the annual target of Rs 2433 crore to 1.18lakh beneficiaries. “The banks and financial institutions of the state are committed to ensure implementation of game changing schemes like MUDRA, despite local constraints,” he said
Source: Economic Times