The financial inclusion strategy by the RBI speaks about opening of banking facilities within 5 km radius of every village and the RBI has drafted guidelines for priority sector lending and special credit policy for the weaker section of the society such as SCs, STs, minority, rural poor, PWD and women.
But in Odisha, a majority of people engaged in agriculture and informal sector, mostly STs, SCs and minority communities, are deprived of easy loan facility.
The National Commission for STs, SCs and Minorities must intervene in the issue as credit facility can ensure economic development of the marginalised poor in the State.
The priority sector lending has been much relevant for poor States like Odisha where it can cover a majority of the population identified as potential beneficiaries of such credit based economic intervention. The credit inclusion will lead to positive changes in production, employment, income and improve quality of life of a vast majority of people in rural area. But in spite of increase in credit flow to agriculture sector in post bank nationalisation era, the disparity in flow of credit among regions and social groups remains a worry.
This needs a serious reflection by the State Government, financial institutions, banks and other concerned, especially organisations working with rural poor, SCs, STs and minorities of the State.
Odisha still witnesses high incidence of poverty, chronic debt, distress migration where agriculture sector is the mainstay of the State economy engaging about 60 per cent of the people in a number of ways.
The socio-economic condition and quality of life of a majority of people engaged in agriculture and allied activities has not changed to a minimum standard in comparison to others. The Union Ministry of Labour report on cost of living based consumer price index 2014 says the cost of living of the agricultural workers in Odisha is one of the lowest in the country; Odisha is the third lowest higher than Bihar and Madhya Pradesh.
In order to bring change in the rural economy, especially in agriculture and allied sector in Odisha, the priority sector lending policy and implementation process needs serious review. Credit is being viewed as productive input which will boost production by bringing modern inputs and affirmatively contribute to food security along with controlling distress migration and unemployment.
The RBI issues credit policy for the banks within which it has identified priority sector to bring sectorial balance. The priority sector lending includes financing agriculture and allied activities, micro and small entrepreneurs, education and housing loans and others targeting the weaker sections, which depend on traditional money lending.
The weaker sections include small and marginal farmers with standard landholding, sharecroppers, tenant farmers, landless labourers, artisans, village cottage industries, PWDs, SCs and STs, self-help groups (SHGs), informal sector workers, manual scavengers, minority communities, and urban poor.
The minority communities notified are Sikhs, Muslims, Christians, Zoroastrians, Buddhists and Jains etc. The RBI has identified 121 minority concentrated districts in the country and in Odisha.
It is equally important to take care of the minority communities within the weaker sections with equitable portion of the credit under priority sector lending. RBI notification says that 15 per cent of the total advance should be for weaker sections of the society and RRBs should have 60 per cent of the credit for the priority sector. Within this, half of the loan should go to small and marginal farmers possessing less than two hectares of land.
The loan can be provided to individuals or groups, SHGs or joint liability groups to meet the objectives and also to corporate, partnership firms and institutions for agriculture and allied activities that include dairy, fishery, piggery, poultry, beekeeping, plantation and horticulture etc.
The loan to small and marginal farmers can be given to purchase land for agriculture purpose and other inputs such as agricultural implements, irrigation and other developmental activities undertaken in the farm. The various activities in pre harvest and post-harvest periods, such as spraying, weeding, harvesting, grading, sorting and transportation, and exporting can also be covered under the activities.
The common guidelines for priority sector loans say there should be no service charge on small loans with a slab and the bank has to maintain a separate register covering data on receipt, sanction, rejection and disbursement of loan. The bank has to issue acknowledgement for loan applications. The loan applications by SCs and STs will be rejected by the next higher authority of the branch with sufficient reasons of rejection.
In the past few decades, the Central Government allocation on agriculture credit has been consistently increasing to meet the challenges of farmers in distress, struggling with a number of issues like crop loss, natural disaster, distress sale, including credit as a major concern.
The banks such as NABARD and RRBs, cooperatives such as the Odisha Gramya Bank and the Kalinga Gramya Bank have a major role in the implementation of priority sector lending in the State. The Odisha SCs and STs Finance Development Cooperative Corporation limited has to address the credit needs of SCs, STs, scavengers and minorities in the State.
But unfortunately, in the context of Odisha, the Central Government schemes implemention and bank interventions remain very poor.
Take for example the standup India scheme. As per guidelines, each branch of a scheduled bank has to extend loans at least to one SC or ST and minimum one women entrepreneur. There were target of 5,830 applications for 2019-20 only 449 loan applications have been disbursed as reported in SLBC meeting.
It is observed that there is lack of sufficient branches and connectivity such as broadband in rural and tribal areas and the bank officials and beneficiaries have very less interaction on the priority sector purpose and procedures of loan. Many of the prospective beneficiaries have no awareness about such facilities being provided under priority sector lending due to lack of information either by the Government or respective banks in their locality.
In most of the cases, the banks in Odisha did not follow the orders of Government officials due to lack of monitoring and periodic review of the annual credit plan targets fixed by the Government. It was also reported that many banks which were performing well in other States were performing very poorly in Odisha.
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