This refers to your editorial, “Reform banking sector” (Feb 22, 2018). In a recent interview, Nobel laureate, Muhammad Yunus of Bangladesh touched a very important point when he said, “We lend money without collateral or any guarantee, and we haven’t had a problem of getting the money back. So I see that entire financial system rejects more than half of the population of the entire world that’s the root cause of poverty.” We know that he gave micro loans to the poor and even to beggars through the Grameen Bank and the pay back rate of such loans was highly satisfactory.
It clearly shows that the pay back rate of micro loans is much more than macro credits. Macro credits have indeed created huge bad loans amounting to Rs. 2.86 lakh crore in 2016 – 17. Now, Nirav Modi’s Rs. 11,400 crore PNB fraud triggers an economic reign of terror in our country.
Our banking sector must have a paradigm shift in their policy to replace macro credits by micro loans for farming, cottage and small enterprises that mainly contribute to current livelihoods in our country. It will generate more employment and thus boost the market by enhancing the purchasing power of the masses and reduce poverty. We must create, so to speak, an employment bridge that can connect excess food and hungry mouths. And that bridge can be built with the help of labour intensive technology, land reforms and micro loans.