Banking sector has failed to meet targets for weaker sections

The banking sector in the country does not seem to be paying
adequate attention to the flow of finances to Dalits and underprivileged
sections and has failed to meet the priority sector credit targets for them.
Whatever flow of funds is visible, it is for the implementation of various
schemes. Making these observations, a new study on "Financial exclusion and
the underprivileged in India" here has suggested announcement of special
packages for credit disbursal to the Scheduled Castes and making them
creditworthy by investing in their education, health and infrastructure.

The study, conducted by the newly appointed Director of the Institute of
Development Studies (IDS), Surjit Singh, reveals that the much talked about
economic reforms have reinforced financial exclusion of landless people
belonging to weaker sections who would suffer the most in the current
agrarian crisis and uprooting as a result of industrialisation and
urbanisation.

Access to institutional credit is denied to a large majority of households
located at the lowest rung of both the economic hierarchy and the
caste-based hierarchical social stratification. At the scheme level, access
is denied because of non-inclusion in lists like Below Poverty Line (BPL) at
times and also because of social exclusion.

The study cites the National Sample Survey Organisation's figures of 2005 to
point out that 49.77 per cent of Scheduled Caste and 63.68 per cent of
Scheduled Tribe farmer households were excluded from the formal financial
system that included the provisions of savings, loans, insurance, payments
and remittance facilities.

The participation of the Scheduled Castes as members of the Primary
Agricultural Credit Societies improved from 13.5 per cent in 1978-79 to
33.18 per cent in 2003 to fall to 30.61 per cent in 2004. The Scheduled
Castes' share as borrowing members fell from 11.5 per cent in 2003 to
6.49per cent in 2004, clearly indicating their continued exclusion.

Since 1993, the number of Scheduled Caste bank accounts declined sharply
from 100.44 lakh to 72.62 lakh in 1997 and then to 61.61 lakh in 2001 and to
41.47 lakh in 2004. The study revealed that the figures showed a decline in
the share as well as absolute numbers of Scheduled Castes. The number of
women Scheduled Caste accounts also fell significantly from 21 lakh in 1997
to 11.3 lakh in 2004.

The average amount of outstanding loan per Scheduled Caste farmer household
was Rs.7,167 compared to Rs.12,585 for all farmer households. The proportion
of indebted farmers at the national level is 18 per cent, while the
proportion of indebted Scheduled Caste farmers varied from 36.4 per cent in
Uttarakhand to 4.5 per cent in Kerala.

Dr. Singh said the most important purpose of Scheduled Caste farmers
obtaining loans was capital expenditure and current expenditure in farm
business. For every Rs.1,000 taken as loan, Scheduled Caste farmer
households borrowed Rs.446 for these purposes. The Scheduled Caste farmer
households borrowed for education as well and it was higher than other
social groups.

Source: The Hindu