Mumbai: Concerned over rising incidents of farmer suicide, Prime Minister Narendra Modi on Thursday nudged banks to be considerate in giving and recovering loans from poor saying banks would not shut by helping them.
“As RBI celebrates 80 years, can we think within ourselves that we will expand our banking sector so much that farmers would not have to commit suicide because of huge debt burden. Can we not dream of this?… I do not believe that by helping poor a bank will become insolvent,” he said.
Farmers’ plight should “shake the conscience” of the banking sector, he said addressing the 80th anniversary celebrations of the RBI where Finance Minister Arun Jaitley, Maharashtra Chief Minister Devendra Fadnavis and RBI Governor Raghuram Rajan were also present.
Speaking at an event on increasing financial inclusion, the PM said he is pained to hear of increased reports of farmers taking their own lives after being unable to repay unscrupulous money lenders.
“Our farmers commit suicide. The pain of this should not only be restricted to newspapers and TV screens. When farmer dies, does it shake the heart of banking sector? Because of taking loan from money lender, he has to face death,” Modi said.
He 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.
He also asked the Reserve Bank to prepare a 20-year road map for financial inclusion and suggested the Indian currency should be printed using indigenous paper and ink.
“Can’t we ask ourselves how we can make our banking system so strong that no farmer is forced to give up his life just because he can’t repay the loan (from money lenders)?” he said.
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.
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,†Rajan said.
Speaking on the occasion, Rajan also cautioned the banks against excessive lending to infrastructure sector projects as it may impact their financial stability.
However, lauding the efforts of Reserve Bank in improving macroeconomic conditions in the last eight decades, Jaitley said that the central bank’s professionalism has served the country well.
(With inputs from PTI)