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The newly-launched Bandhan Bank will fund lakhs of small and medium entrepreneurs, create jobs and act as a response to agrarian poverty, Finance Minister Arun Jaitley said today.
"A great institution is being born in West Bengal," he said while inaugurating Bandhan Bank here.
Bandhan Bank today launched its operations with 501 branches in the country. The company, which started as a micro finance institution, received final approval from the Reserve Bank of India (RBI) in June to commence commercial banking operations.
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Jaitley said Bandhan Bank Chairman and Managing Director Chandra Shekhar Ghosh has said that the priority area of the bank will be small and medium enterprises (SMEs).
"It is a landmark initiative in the service of the country and state. It is these entrepreneurs in SMEs, many of them in the unorganised sector, who today form the backbone of Indian economy."
"Small entrepreneurs, from shopkeepers to hawkers, generate almost 11-12 crore jobs in this country. The large organised industry is able to generate only a small fraction of that," Jaitley said.
He said if private sector initiatives like Bandhan Bank join in the effort of funding at the grass-root level, then small enterprises can grow on their own feet.
"All over the eastern parts of the country, in states like West Bengal, if we are able to create small entrepreneurs in lakhs, we can then see it as a response to agrarian poverty that is building up," Jaitley said.
The objective is to extend over Rs 1 lakh crore worth of funds to SMEs across the country, Jaitley said, adding that SMEs usually repay what they borrow and the banks' NPAs are not because of lending to this sector.
"If funding of unfunded sector continues, it is they who generate jobs and it is they who take very little assistance from the state and go back and return what they borrow. The problem of NPA, certainly this segment is not responsible for them," he said.
Jaitley also said that the Centre has set up a MUDRA agency which will slowly evolve as MUDRA Bank whose main purpose is to fund the unfunded.
