269
in particular have neglected the small borrowers with say,
`
25,000 or less
credit limits. This situation has to be corrected.
(x)
Effective Implementation of the Measures of ‘Financial Inclusion’
As cited in the previous section, at the all-India level, as much as 46
million farm households (or 52%) out of a total of 89 million remain excluded
from any form of debt facilities. A large number of them are small and marginal
farmers. Of the 43 million who are indebted only 25 million enjoy the benefits
of institutional loans. Thus, there is the need for bringing in 72% of the farm
households (i.e., 65 million out of 89 million) into the institutional fold for
credit delivery. This deprivation has been the steepest in central, eastern and
north-eastern regions. Thus, ‘financial inclusion’ encompasses two tasks: first,
improving the share of institutional credit flow to those who are heavily indebted
to non-institutional sources; and second, extending institutional credit to those
farmer households which do not have access to any source of finance.
The issue of ‘financial exclusion’ can be addressed only by a multi-
pronged approach: expanding the branch network and improving the overall
credit architecture if necessary with link-ups with the local institutions,
increasing credit-deposit ratios in underdeveloped regions and implementing
effectively the series of working group recommendations for better credit
delivery for the farm community in particular.
(xi) Kisan Credit Card (KCC) to become a Regular Credit Card
At present, KCC is not a card
per se
. It is only a pass book with an ID
and all financing details. Amongst the many reforms suggested earlier in this
respect, an important one is that steps must be taken to convert KCC into a
regular credit card or a biometric card, with all the necessary precautions.
(xii) Credit Architecture for Central, Eastern and North-Eastern Regions
to be Placed on a Mission Mode
All the measures suggested above, which would go to strengthen the
institutional credit structure in the country, should be prioritised for making
the most ficussed impact by covering these underdeveloped regions; the
promotion of credit architecture should thus be placed on a mission mode in
central, eastern and north-eastern regions. It must be noted that the existing
system of opening deposit accounts for the poor in north-east and some other
selected districts as part of ‘financial inclusion’ is a misconceived idea; it is not
a solution to the crying credit needs of the poor.
29*
29
*
One such plan of action is contained in the recommendations of Report of the Committee
on Financial Sector Plan for North Eastern Region (Reserve Bank of India, July 2006a).
