With the LDM our discussions were regarding credit facilities offered by banks, understanding of the rural poor and the sensitivity/ support shown by bankers towards their customers. The LDM mentioned an important point, which was, that most rural poor took loans from Banks for granted. There could be many reasons for this behaviour. Some of them are listed below:
1. The effort in receiving a loan is tiresome, and most people would have to visit the branches in neighboring towns, often 10-20 km apart, wait in queues and then be turned away for lack of proper documents. Hence, once when they do get a loan, they’d think it is not worth paying back, since it is more like a reward/remuneration for all their efforts.
2. To add to it are fluctuating government policies of waiving off loans to agricultural poor. Even if there are people who would be working hard towards paying off their loans, a government mandate would suddenly waive off any loan payments by those who were defaulting on their payments. This tends to be very disheartening for those who have made regular payments towards their obligations, no matter what the cost. Hence, the credit repayment delinquencies were more related to local sentiments that their actual abilities.
3. Banks are often in cash strapped scenario and dealing with huge NPA balance. For them to give out easy credit is a huge liability on the officiating personnel. Hence, asking the farmers to come back a few times seems a legitimate way of sifting through genuinely needy customers.
However, this method is very long and tedious and most customers have to resort to taking cash from moneylenders or unregulated bodies or, at best, from MFIs at much higher interest rates.
4. LDM also told of some anecdotes about savings he would often tell the villagers so that they would easily understand the concept of savings and other banking facilities.
Despite these, almost 90% of the villagers had savings bank accounts and knew how to withdraw cash from their accounts. There had even been a recent initiative to introduce Kisan Credit Card and credit facilities to the villagers by conducting one-day seminars at the villages. The turnout was inspiring and these will translate to better use of banking services too.
At present the villagers lead a very self-sufficient lifestyle. Whatever is produced within the village is consumed and the villagers are happy with their lot. They are scared of credit cards and credit facilities as they do not understand all the terms and conditions. In a way, their lives are still quite dependent on conditions out of their control like the seasonality of rainfall and hence, agricultural produce. For many villagers, the wish of scaling up their businesses is not backed by adequate knowledge or skills. In such an instance, it may be worthwhile to consider whether easy credit should be allowed early or are more concerted deeper, more penetrating developmental changes required to backup their aspirations.