People at the bottom of pyramid do not have capacity to absorb credit, cautions Rajan at a seminar of IMF and World Bank meetings
GN Bureau | October 9, 2015
As India pushes for big time financial inclusion of the marginalized with schemes like Jan dhan yojana, RBI governor Raghuram Rajan has said financial inclusion should not be pressed beyond a point because beneficiaries may not have the capacity to make use of funds being made available to them.
Rajan made these comments on yesterday while participating in a seminar on 'Financial inclusion: Can it meet multiple macroeconomic goals?' on the sidelines of IMF-World Bank meetings in Lima, Peru.
He felt that pushing financial inclusion beyond a point can have negative impact because people at the bottom of pyramid do not have capacity to absorb credit.
"In my sense, beyond a certain point... (financial inclusion) becomes actually negative," he said, adding that everyone should not be pushed to borrow.
The Indian cabinet has okayed a two-phase financial inclusion scheme under which bank accounts will be opened for 15 crore poor people with an overdraft facility of Rs 5,000 and accident insurance of Rs 1 lakh.
RBI governor also made a case for strengthening the payment mechanism to improve traditional method for delivery of credit.
He further said technology and e-model could be used for improving businesses at remote centres. Giving an example, he said a carpet weaver in Kashmir can benefit immensely by selling his products electronically.
At the same time, Rajan made a strong case for developing capacities to deal with the misuse of technology by criminal elements.
Some unscrupulous elements have been misusing technology to fleece people by sending fake mails in the name of RBI, he said, adding sometimes people do fall into trap and pay the upfront process fee demanded by such persons.
"We have to deal with such problems at RBI... technology has the ability to do harm... we have to worry about that," Rajan added.
Video of the seminar: click here
IMF paper on financial inclusion: click here
Maya Kodnani, a BJP leader who was the MLA from Naroda when this locality on the outskirts of Ahmedabad witnessed one of the most gruesome episodes during the Gujarat riots of 2002, was acquitted by the Gujarat High Court on Friday. Her acquittal in the Naroda Patiya massacre case is only a sequel to
The number of civic complaints with BMC has increased from 61,910 in 2015 to 92,329 in 2017, which is 49% in two years. A report titled ‘Civic Issues Registered by Citizens and Deliberations done by Municipal Councillors in Mumbai’ released by Praja Foundation has found some interesting facts a
Atishi Marlena is among the nine AAP functionaries who were dismissed by the union home ministry asserting that their posts were created without the approval of the centre. Marlena, served as education advisor of the Aam Aadmi Party (AAP)-led government in Delhi. While she was intrumental in improving the
The Fortune magazine has named three Indians – lawyer Indira Jaising, industrialist Mukesh Ambani and architect Balkrishna V Doshi – among the world’s greatest fifty leaders.
Remember Kardashev scale? For the uninitiated, it’s a method of measuring a civilization’s level of technological advancement, based on the amount of energy it is able to use for communication. We will get to its unconventional relevance to the big urban questions at the end, but just keep it a
Out of 1580 MPs and MLAs with criminal cases, 48 (three MPs and 45 MLAs) have declared cases related to crime against women. The Association for Democratic Reforms (ADR) and