R.V.Moorthy

Financial inclusion:: The Union Finance Minister, Mr P. Chidambaram, and the Delhi Chief Minister, Ms Shiela Dikshit, at the launch of Micro Credit Scheme for Slum Dwellers of Ekta Vihar in New Delhi on Thursday. Mr Chidambaram said that the scheme would enable every family in Ekta Vihar to get a no-frill bank account and access to financial services including a variety of loans.

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New Delhi, June 19 The Finance Minister, Mr P. Chidambaram, on Thursday expressed confidence that ‘financial inclusion’ would be a reality in about three-five years even as he exhorted those outside the banking system to come within its fold and avoid going to the money lenders.

Launching a micro-credit scheme for the slum dwellers of Ekta Vihar in Delhi on Thursday, Mr Chidambaram said that this scheme would enable every family in Ekta Vihar to get a no-frill bank account and access to financial services including a variety of loans.

“Around Ekta Vihar, there are any numbers of bank branches. But not a single person in that area has a bank account. This pilot micro-credit scheme will help every family to get a no-frill account,” he said.

Under the micro-credit scheme, slum residents could avail themselves of loans for a variety of purposes — including set-up or expansion of retail businesses, higher education, home improvements, modes of transport and loans for professional or self-employed business people.

The rate of interest is fixed at 10 per cent and borrowers will have 1 per cent of the interest refunded when prompt repayments are made. No processing or other fees will be charged and there will be no penalty for early settlement of any loan.

Based on the experience and its success in this area, the Finance Minister said that the micro-credit scheme would be rolled out to other such areas in Delhi. “There are islands of exclusion when there are so many banks in Delhi. We will roll it out in Delhi. Similar exercise is on in Mumbai, Varnasi, Kolkata and Chennai,” he added.

The micro-credit scheme is a collaborative initiative between the Finance Ministry, nine public sector banks and Asha Community Health and Development Society, a non governmental organisation working in the field of healthcare and development in the slums of Delhi.

In Delhi alone, there are 4 million people who are financially excluded i.e. they do not have any bank account and cannot get financial services. In India, roughly one-half of the people are financially excluded.

In Budget 2008-09, as part of the financial inclusion efforts, the Finance Minister had announced a new policy that would require every branch in semi-urban and rural areas of every bank to have 250 new households as their customers and take financial services to them.

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