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After lauding P Chidambaram's move to set up a state-run women's bank, there is a growing concern in Congress that this may not be enough to fulfill the party's promise to empower rural women with better access to credit.
Senior Congress leaders and sections of the government feel that a specialised financial institution similar to Nabard or Sidbi would be more effective in meeting the party's objective.
In a letter to Chidambaram, Rural Development Minister Jairam Ramesh has suggested an alternative strategy and proposed setting up a "specialised developmental financial institution" on the lines of Sidbi through an act of Parliament. He has suggested that the budget's allocation of 1,000 crore for the women's bank can be used as initial equity for the proposed financial institution, which could then raise up to 3,000 crore through tax-free bonds and concessional loans.
Ramesh, whose ministry spearheads the national rural livelihood mission Aajeevika, has been advocating better linkages between banks and women's self-help groups (SHG) to improve financial inclusion and empowerment of women. He urged the FM to consider his suggestion as "it is being offered to fulfill the commitment made at Jaipur and also allows us to successfully implement Aajeevika, one of the flagship programmes of the government launched by the UPA Chairperson in June 2011".
Complimenting the finance minister on the "speed" with which he has "moved to give effect to a most important commitment made in the budget speech", Ramesh said that a new public sector bank would be "limiting in nature" for the objective.
The rural development minister is of the view that the entire bank network comprising 80,000 branches-23,776 in rural and 22,568 in semi-urban areas-should be leveraged to reach more women self-help groups throughout the country. However, Ramesh argued that a new bank, which relies on creating its own branch network, would not be able to leverage the existing network.
Over the next five years, some 60 lakh groups (roughly 7 crore households) are expected to become part of the national rural livelihood mission with a projected credit requirement of 40,000 crore, and this is set to jump to 100,000 crore a year after that. Ramesh argues that better linkage with banks is required to meet this demand.
The Congress too is keen that an institutional mechanism be put in place to help and improve the capacity of women self-help groups. In its 2009 election manifesto, the Congress had pledged that it would endeavour to ensure "that at least half of the country's rural women population get enrolled as members of SHGs linked with banks and that the SHGs get loans from banks at moderate interest rates. The Jaipur declaration hammered out at the party's brainstorming session, or chintan shivir, amplified on this poll promise.
Source: Economictimes
Senior Congress leaders and sections of the government feel that a specialised financial institution similar to Nabard or Sidbi would be more effective in meeting the party's objective.
In a letter to Chidambaram, Rural Development Minister Jairam Ramesh has suggested an alternative strategy and proposed setting up a "specialised developmental financial institution" on the lines of Sidbi through an act of Parliament. He has suggested that the budget's allocation of 1,000 crore for the women's bank can be used as initial equity for the proposed financial institution, which could then raise up to 3,000 crore through tax-free bonds and concessional loans.
Ramesh, whose ministry spearheads the national rural livelihood mission Aajeevika, has been advocating better linkages between banks and women's self-help groups (SHG) to improve financial inclusion and empowerment of women. He urged the FM to consider his suggestion as "it is being offered to fulfill the commitment made at Jaipur and also allows us to successfully implement Aajeevika, one of the flagship programmes of the government launched by the UPA Chairperson in June 2011".
Complimenting the finance minister on the "speed" with which he has "moved to give effect to a most important commitment made in the budget speech", Ramesh said that a new public sector bank would be "limiting in nature" for the objective.
The rural development minister is of the view that the entire bank network comprising 80,000 branches-23,776 in rural and 22,568 in semi-urban areas-should be leveraged to reach more women self-help groups throughout the country. However, Ramesh argued that a new bank, which relies on creating its own branch network, would not be able to leverage the existing network.
Over the next five years, some 60 lakh groups (roughly 7 crore households) are expected to become part of the national rural livelihood mission with a projected credit requirement of 40,000 crore, and this is set to jump to 100,000 crore a year after that. Ramesh argues that better linkage with banks is required to meet this demand.
The Congress too is keen that an institutional mechanism be put in place to help and improve the capacity of women self-help groups. In its 2009 election manifesto, the Congress had pledged that it would endeavour to ensure "that at least half of the country's rural women population get enrolled as members of SHGs linked with banks and that the SHGs get loans from banks at moderate interest rates. The Jaipur declaration hammered out at the party's brainstorming session, or chintan shivir, amplified on this poll promise.
Source: Economictimes
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