Amit Mitra writes to FM on banks rejecting over 60% of loan applications from weavers, artisans

As many as 40,000 applications for loans by the weavers and artisans of West Bengal have been rejected by banks due to “faulty notifications of the government and Reserve Bank of India. The primary cause for such huge rejections by the banks was the stringent notification by the central government which has made a variety of requirements including PAN card mandatory for even micro weavers and artisans.

According to Amit Mitra, Principal Chief Advisor to West Bengal Chief Minister and Finance Department, the number of such rejections could be 5-10 lakh across the country. In a letter addressed to the Union Finance Minister, Nirmala Sitharaman, Mitra said that this was anathema to financial inclusion and contradictory to G20’s action plan.

“I write this letter in anguish for thousands of highly skilled and innovative weavers and artisans of our State who are being denied bank loans, despite your government’s lofty pronouncements on financial inclusion. This is even more pertinent at a time when G-20 nations have made financial inclusion of SMEs and micro enterprises as their focus area in their global action plan,” he said in the letter.

In West Bengal alone, 10,108 out of around 15,298 weavers, who had applied for loan, faced rejection by banks, translating into 66 per cent rejection rate between April and September 2022. All the applications had been vetted by the District Industries Centre, as a requirement by banks. Furthermore, all of them were holders of the Weaver’s Credit Card.

He further said that out of 48,153 applications for loans from the artisans, 29,656 applications were rejected translating into 62 per cent rejection rate.

“In a recent meeting of the State Level Bankers’ Committee, which I mentor, it became evident that the cause of such huge rejections by the banks was the stringent notification by the government of India which made mandatory a variety of requirements including PAN card etc for even these micro weavers and artisans. Unfortunately, RBI too has brought out a similar stringent notification,” he said in the letter.

These notifications of government and RBI have tied the hands of the bankers from lending to the micro enterprises, leading to massive rejections.

Mitra urged for urgent intervention so as to ensure financial inclusion of the entrepreneurs from the bottom of the pyramid.

“I humbly urge you to persuade both RBI and MSME department of government of India to rectify the notifications and allow self-certification by micro weavers and artisans for bank loan applications, as was the case in the initial notification,” he said.