Business Reporter :
“The higher interest rates and potential for exploitative practices in the NBFC sector put significant financial strain on SMEs, limiting their growth and sustainability,” AIBOC General Secretary Rupam Roy said
BANK officers’ union AIBOC on
Thursday underscored the need for
expanding financial inclusion and
focus on meeting credit needs of
small borrowers.
There are reports of farmers’ suicides from different parts of the
country,afallout of exorbitantinterestrate chargedby the NBFCs/money lenders, along with unremunerative farm product prices, All India
Bank Officers’ Confederation
(AIBOC) said in a statement on the
eve of Bank Nationalisation Day.
There isaneedforexpandingrural
presence of banking sector so that
the poor farmers don't fall prey to
NBFC and money lenders, it said.
As per recent reports, only about
74,000 villageshave access to banking services, it said.
Access to credit forthe rural poor
in India remains a significant challenge, AIBOC General Secretary
Rupam Roy said.
Theprioritisationofbigger clients
by larger banks post-merger leads
to reduced access to bank credit for
smaller businesses, driving them
towards NBFCs, he said.
The higher interest rates and
potential for exploitative practices
in the NBFC sector put significant
financial strain on SMEs, limiting
their growth and sustainability,
he added.
The statement further said privatisationofnationalisedbanksand
the trend towards consolidation
under larger banking entities are
not solutions to the underlying
problems inthefinanciallandscape.
Privatisationshifts the focus from
social and financial inclusion to
profit maximisation, leading to
increased economic inequality, it
further said.
Ina bidtowardsprivatisation,the
Government changed their strategy and merged public sector banks
(PSBs),bringing theirnumber down
to 12, it said, adding that this is a
form of backdoor privatisation.
These steps were taken disregardingthat thePSBs lifted theeconomy out of recession both during
the global meltdown of 2008 and
2020 Covid pandemic, it said.
One of the most immediate consequences ofPSBmergershasbeen
the erosion of their market share, it
claimed.
Without increasing their efficiency, the share of PSBs in total
deposits has decreased from 66 per
cent at the end of 2017-18 to 59 per
cent in December 2023, it said.