Poor Are ‘More Prompt’ In Repaying Loans


New Delhi – India’s poor are more prompt in repaying loans and deserve access to more financial services, Finance Minister P. Chidambaram said on Tuesday.

The poor in India, he said, were ethical and not bad borrowers, and asked banks and financial institutions to make extra efforts to lend more to those in the bottom of the pyramid.

While big corporate houses can easily get loans of Rs 1,000 crore or more with little effort, the poor face multiple challenges in even getting small loans, he said, after releasing a social audit report of Shriram City Union Finance Ltd in the Capital.

In fact, a large business house can easily raise Rs 1,000 crore and can even not repay loans, Chidambaram said.

“But that is not so for the poor borrower. There is no margin of error for him. The small borrower has to borrow small amounts, pay what may appear to be a higher rate of interest, make money, repay the loan in time, as otherwise he will not get the second loan,” he said.

His remarks are significant in the backdrop of the financial troubles of the Vijay Mallya-promoted Kingfisher Airlines, whose licence is under suspension.

Public sector banks have an aggregate exposure of about Rs 7,000 crore to Kingfisher Airlines, whose account is a non-performing for most of the banks in the consortium.


Chidambaram said the Government had placed great emphasis on financial inclusion and had tried models such as business correspondents, one-man branches and ultra small branches.

He said the Government had also encouraged non-banking finance companies and microfinance institutions to help achieve financial inclusion.

“But there have been some black sheep…some cases of failure of ethics. But, largely, financial inclusion efforts have worked well,” he said, but admitted that there was still lot of distance to cover.

Majority of people in the country have no access to any kind of financial services, including bank account.

K. R. Kamath, Chairman and Managing Director, Punjab National Bank, said only 40 per cent people in the country have formal banking accounts.

“It is in our interest that we ensure that financial services activities are taken to the entire population of the country,” he said. Agencies

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