(a) whether it is a fact that a major problem in all developing
countries is that the formal banking system is ill-equipped to meet
the credit needs of the informal sector; and
(b) if so, the measures being taken by the Government to provide
credit to informal sector?
MINISTER OF THE STATE IN THE MINISTRY OF FINANCE
(SHRI S. S. PALANIMANICKAM)
(a)&(b): While no specific information is available about the formal
banking system in developing countries being ill-equipped to meet the
credit needs of the informal sector, in India there are various Central
Government Sponsored Schemes (CGSSs), being implemented through the banks,
which provide access to credit to the informal sector. These schemes
have a subsidy component from the Government and a loan component from
the banks. These include the Swarnjayanti Gram Swarozgar Yojana (SGSY) for
the rural poor, Swarna Jayanti Shahari Rozgar Yojana (SJSRY) for the urban
poor, Scheme for Liberation and Rehabilitation of Scavengers (SLRS) for
those who are engaged in scavenging and Prime Minister`s Rozgar Yojana (PMRY)
for the educated un-unemployed youth. Banks also extend finance to the
poorest of the poor under the Differential Rate of Interest Scheme (DRI),
which involves interest subsidy. Banks are also implementing the Kisan Credit
Card (KCC) scheme for the farmers. Apart from this, banks also lend under
various microfinance models to the Self Help Goups (SHGs). As on 31st March
2005, 16.18 lakhs SHGs have been linked to banks and the total credit flow
to these SHGs was Rs.6898 crores.