From no cash to Rs 82,864 cr, Muslims cross credit milestone
Cash flow to minorities — from bank loans to scholarships — peaked during 2008-09, government data has revealed, as Muslims appeared to be slowly overcoming a strong bias of banks in lending. Zia Haq reports.india Updated: Jul 16, 2009 00:34 IST
Cash flow to minorities — from bank loans to scholarships — peaked during 2008-09, government data has revealed, as Muslims appeared to be slowly overcoming a strong bias of banks in lending.
Public sector banks, which would turn down Muslim loan applicants because they were considered “credit risk groups”, have disbursed a staggering Rs 82,864 crore in loans to minorities during 2008-09.
Since the Reserve Bank has turned its focus to 121 backward minority districts with high Muslim population, as identified by the minority affairs ministry, Muslims have got a chunky pie of the credit share.
Banks now have to compulsorily service Muslims in backward areas after the Reserve Bank added minorities to its list of other priority lending sectors, like agriculture and small-scale businesses in July 2007.
“It reflects the commitment of the government. We’ll be able to see the results shortly if not immediately,” Planning Commission member Sayeda Hamid told HT. This would ultimately increase their incomes, she said.
Sachar Committee report had pointed out that India’s 150-million Muslims were self-employed at a far higher rate than other groups, needed cash but faced serious disadvantages. Going by the number of bank accounts, there was a 12% deficit, compared to the population share of Muslims of 32% in 44 minority concentration districts, the report stated.
Cash constraints are now easing, with banks achieving lending targets set for minorities.
In 2008-09, the Reserve Bank’s target was that 13% of loans under priority sector lending should go to minorities and banks were able to lend 12.4%.
This was better than 2007-08, when the target was 10.6% and actual sanctions 9.6%. Priority sector lending accounts for 40 per cent of total loans, according to RBI norms.
Various banks also opened 524 branches in minority concentrated districts this year and nearly six-lakh minority students got scholarships. Last year, 523 branches were set up.
The Centre has earmarked Rs 7,000 crore for minority welfare under the 11th Five Year Plan that concludes in 2012.