A bank for SC/ST needs

A bank exclusively to meet SC/ST needs?
22 May 2008, 0312 hrs IST,Mahendra Kumar Singh,TNN

NEW DELHI: The government is considering a proposal to set up a national bank for Scheduled Castes and Tribes to ensure "dedicated funding" for the disadvantaged groups.

The bank, likely to be established on the lines of National Bank for Agriculture and Rural Development (Nabard), will finance economic activities of people belonging to SC/ST groups to uplift their standard of living.

This may be followed by dedicated banks for other socially weaker sections like OBCs, minorities, safai karamcharis and physically- challenged. Under the plan, the government intends to restructure all six national corporations for disadvantaged groups and turn them into full-fledged banks.

On Monday, the Planning Commission held a meeting with chairpersons and directors of the finance and development corporations working for these groups.

Plan panel member Bhalachandra Mungekar said, "There are systemic problems in the functioning of these corporations. The need is to infuse professionalism to ensure that disadvantaged groups get access to adequate credit."

However, Mungekar added, "These corporations are functioning to the best of their competence under the circumstances. The Planning Commission is considering how to turn them into professional organizations with a social purpose and in course of time, this issue will be discussed at a higher level."

Sources said the plan was to convert all six corporations for disadvantaged groups in a phased manner to national level banks which could raise capital from the market and provide special services to these groups on the pattern of Nabard. The move would also protect these organizations from political interference as defeated and retired politicians were often appointed as chairpersons, an official said.

Mungekar called the meeting to review the lending policy, coverage and recovery from beneficiaries and to find out alternate strategies to make these corporations more effective in their functioning. These corporations are generally funded by the central and state governments to ensure that beneficiaries get loans at lower interest rate as commercial banks have failed to fund this section of society.

But it has been noticed that functioning of these corporations were not up to the mark, considering financial inadequacy, dependent on central and state governments, poor recovery and lack of autonomy. The six national corporations were disbursing loans worth Rs 500 crore only every year and annual beneficiaries were just around 30,000.