This refers to “Bravo FM, but it’s only half the job done’’ by Tamal Bandyopadhyay (September 9). The article has made a case for freeing up public sector banks from the tradition of directed lending. Examples of government sponsored schemes that failed to kick start the rural economy were enumerated. It should be noted schemes like IRDP, SEEUY, SEPUP were well thought-out and aimed to provide employment opportunities to families and educated youths. If these schemes were implemented in letter and spirit, we would have had a different story to tell. The failure of these schemes was in their implementation at grassroots level.
Under these schemes, the identification of borrowers was done by local government functionaries. Banks were used only for the disbursement of the loans. Village-level corruption was endemic. In most cases, it was not the neediest who were chosen to be financed but the one who had the contacts or who knew how to game the system. There was no pressure on banks to recover the loans. While there were targets for loan disbursements, there was no such targets to recover previous loans. Conscientious bankers who went after defaulting borrowers did not get the requisite support. There were also cases of bank officials being tormented for not granting loans. Most of the managers were posted in locations far away from their roots. With this handicap, it is not surprising managers were not stringent while identifying borrowers or that they did not exert themselves to recover loans.
Let us hope we learn from the past and see the dawn of a new era in banking.
KV Premra, Mumbai
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