A recent press report said that Prime Minister Mr.Manmohan Singh’s government is pushing state-run banks to give out up to Rs.10,000 in unsecured loans to landless laborers to boost consumption in rural areas, which bankers say reminds one of ‘loan melas’ of the 1980s that crippled the banking industry.
Reports also said that Public sector banks should also speed up distribution of Kisan Credit Cards to farmers who have not defaulted in the past as it could fuel demand for goods and keep the rural economy buzzing even as the continuous hike in price eats into their earnings.
According to a letter to the banks from a bureaucrat in the finance ministry, each bank will also work out a scheme of providing savings or overdraft facility to families which do not have land, but live in rural area. Reports said that the letter states that such loans should be for “personal consumption purposes” and based on “personal guarantee” from a fellow villager.