Author: Sugata Ghosh
Publication: The Economic Times
Date: January 17, 2007
URL: http://economictimes.indiatimes.com/This_is_vote_bank_politics_at_its_best/articleshow/1234179.cms
[Note from the Hindu Vivek Kendra: Will the
secularists be outraged over this move of appeasement by the UPA government?
We doubt it, since it is done by a dispensation that they have deemed to be
secular, and such appeasement is expected to keep the 'communal' forces from
coming to power. It is this authentication of the vote-bank politics that
is the major problem for India.]
Men in pinstripes may find themselves at the
wrong end of minority politics. Soon, a banker writing a loan cheque will
have to take into account the borrower's religious practice.
The government has asked the Indian Banks'
Association (IBA) to consider earmarking a slice of total loan disbursement
for members of minority communities. This will work out to as high as 6% of
the total loans given by the banking sector.
In a letter dated January 9, the banking division
under the ministry of finance has told IBA to examine the proposal to set
aside 15% of priority sector lending in all categories for minority communities.
IBA, in turn, has asked member banks to furnish details of loans to minorities-the
quantum of such credit compared to the total loan book. In the communication
dated January 11, the association has also sought the views of bank managements
on the proposal.
Banks in India are required to lend 40% of
total disbursements to segments like farmers and small businessmen, who constitute,
along with a few other categories, the priority sector. Even indirect farm
credit and home loans below Rs 10 lakh are included in the priority sector.
The latest proposal will entail giving 15% of the 40% priority sector loans-6%
of total loans-to borrowers from minority communities.
Senior bankers, taken aback by the proposal,
said unlike in the UK and US, there are no reports of institutional lenders
in India discriminating against minorities, and the borrower is not required
to disclose his religion in the loan application.
Moreover, there is already a mechanism of
disbursal to minority community members. At present, banks extend loans to
borrowers referred to them by the respective state development commissioners
for minorities. These loans also carry an element of government subsidy.
However, such loans are unlikely to constitute
even 1% of total bank loans. "There simply aren't enough applications
from the minority commissioner's office. Giving loans outside this mechanism
and identifying minority group borrowers with the right loan demand, risk
appetite and repayment capability is not easy," said the chairman of
a PSU bank.