Lend more to poor as they are honest borrowers: FM

New Delhi: Finance Minister P Chidambaram asked banks and financial institutions not to hesitate in giving loans to the poor, saying they are honest borrowers and do not default on payments.

“The point which I have driven home so many times, the poor in India are not bad borrowers, the poor in India are not dishonest borrowers, the poor in India are ethical, honest, are deserving borrowers. Therefore we must lend more to the poor,” he said at a function here.

The Minister said while big corporate houses easily get loans, even of Rs 1,000 crore, the poor face problems getting a loan .

“In fact a big business house can easily raise a thousand crore rupees…They can even not pay their loans. The story is that if you are a small borrower you go after the bank and if you are a big borrower the bank goes after you,” he said.

More from Economy

Inflation likely to be a big focus area for budget 2024, say sources Explained: Will the Bank of Japan break tradition and raise interest rates?

[caption id=“attachment_499975” align=“alignleft” width=“380”]  File photo of P Chidambaram. PTI[/caption]

The Finance Minister further said that if a corporate borrower fails to pay the loan, it is the bank which suffers, not the borrower.

“But that is not so for the poor borrower. There is no margin of error for him. The small borrower has to borrow small amount of money, pay what may appear to be a higher rate of interest, make money, repay the loan in time because otherwise he will not get the second loan,” he added.

Emphasising the fact that the poor must get loans, Chidambaram said he himself has seen on many occasions Self Help Groups (SHGs) or education loan borrowers repaying their loan.

“So I think it is important to remember that the poor in this country deserved to be helped,” Chidambaram added.

The Finance Minister also emphasised on the need to bring the entire population under the ambit of formal financial coverage.

Highlighting the plight of borrowers who take funds from money lenders on high rate of interest, the Finance Minister said the government has taken steps to bring the deprived section into the fold of formal banking network.

PTI