A data-based empirical approach to designing of credit plan is essential, says RBI's Dy Guv Swaminathan

RBI Deputy Governor Swaminathan J, while addressing a conference for lead district managers of Maharashtra last week said that in this age of abundance of data and analytical models, a data-based empirical approach to designing of credit plan is essential. Such techniques provide the ease with which targeted strategies can be developed for intervention. Having said that, the primary step of data collection should be through field surveys and not be substituted by just an academic understanding, he said. The field surveys also enable to identify those areas which are more in need of credit flow and have a better capability of servicing the loans. This should be the premise on which one formulates bankable schemes.

Moreover, statistics show that about half of the Self-Help Groups (SHGs) are yet to be linked to formal credit, and a large proportion of small and marginal farmers still lack access to bank financing, the Deputy governor said. Another class of potential borrowers which has remained underserved are the MSMEs and within that, those led by women. Therefore, when we adopt an empirical approach coupled with your on-ground experience for designing of a credit plan, the credit requirements of such segments can be effectively addressed through suitable Potential Linked Credit Plans as well as in block and district-level credit strategies, Swaminathan said. The ultimate objective is to bring about measurable outcomes through systematic designing of credit plans, he added.

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