By IANS,
Bangalore : Karnataka’s Rural Development Minister Jagdish Shettar Thursday exhorted financial institutions and banks to liberally extend micro-finance loans to the needy for rapid socio-economic development and inclusive growth.
“Micro-finance loans serve as the last-mile bridge to low-income population, which is excluded from traditional financial services system and seeks to fill the gap,” Shettar said at a national conclave on “Micro-finance – Strangulate or Regulate”, organised by the Associated Chamber of Commerce and Industry (Assocham) here.
Lauding the Reserve Bank of India (RBI) in regulating the sector and tackling issues such as cost of raising funds, interest rates, loan ticket size, repayment options and operating costs due to door-to-door approach, Shettar said that 95 percent of entrepreneurs who availed micro-finance had a positive impact on their personal and professional life.
“Micro-finance has matured from being a development activity to an economic driver at the grass-roots level. India being the world’s largest micro-finance loan market, the sector has a huge potential to grow at about 50 percent annually and attract domestic and foreign investors to lend,” Shettar told the captains of the industry.
Advocating micro-finance institutions to diversify their customer base by reaching out to the excluded segments of the low-income population in semi-urban and rural areas, the minister said the importance of micro-finance in the economic development of the country cannot be overlooked as it helped in driving financial inclusion.
Karnataka has emerged as the second fastest growing state in the country for micro-finance loan activities after Andhra Pradesh. The southern state has 27 micro-finance institutions with 3.2 million customers and three million members, including 232,000 self-help groups.
Assocham president Dilip Modi hoped the unique identity cards (Aadhar) would revolutionise the micro-finance sector by reducing transaction costs and expediting disbursements.
“Though micro-finance is still at nascent stage in the country, it can metamorphose into a bigger activity if given the right fillip. The quantum of loans can to be enhanced by sustained efforts of the stakeholders, including self-help groups and non-government organizations,” Modi said on the occasion.
According to a study by the chambers, the financial needs of micro-finance institutions are estimated at $200 billion in the long-term, with potential generate employment and income to larger sections of the lowest strata of the pyramid.