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There is a growing vexation among low-value customers not just in the agriculture sector but also in the context of financial inclusion when it comes to dealing with formal lending institutions, said the Reserve Bank of India Governor, Dr D. Subbarao.
“There is a question of increase in transaction costs due to a host of factors, including the type of collateral (if any) needed, higher monitoring and follow up by banks, loan administration procedures, and inflexible lending policies,” said Dr Subbarao at a Nabard event in Mumbai on Thursday.
The Governor observed that there is a long waiting period for customers while transacting with the formal lending institutions. Some customers complained of waiting from 11 a.m. to 3 p.m. for their documentation process while some were made to revisit the branches.
He added that the opportunity cost for the farmers was quite high while transacting with the rural institutions leading to frustration among the customers.
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