Christians and Muslims to gain as government links loans to population share
As a result, the minority affairs department has already flagged the issue to bankers and the finance ministry has stepped in now.
By Sidhartha, TNN | Updated:
NEW DELHI: The BJP government is asking public sector banks to lend to each minority community in line with its share of the total minority population within the 6% quota fixed for all minorities. The move will result in higher credit flow to Muslims and Christians. Under current rules, banks have to mandatorily earmark 15% of their priority sector loans to minority communities. Priority sector lending in turn is mandated as 40% of all bank loans and includes those to agriculture and micro, small and medium enterprises.
Census 2001 figures for the population of various minority communities shows that they put together constituted about 19.5% of India's population. Muslims were around 69% of the minority population, Christians 12%, Sikhs just under 10% and the rest about 9%. While these shares may have changed somewhat in the 2011 census, yet to be released, they are unlikely to have changed drastically. Therefore, the new norms would mean that about 4% of all bank loans would go to Muslims, around 0.7% to Christians and 0.6% to Sikhs.
Against the stipulation, banks were providing 16% of the priority sector loans to minorities at the end of December 2014. Although the rule has resulted in higher flows to this segment following the UPA government's decision in June 2007, studies suggest that Muslims and Christians have not benefitted adequately, while some other minority groups like Jains, Parsis and Sikhs account for larger chunks of bank loans.
As a result, the minority affairs department has already flagged the issue to bankers and the finance ministry has stepped in now. "It has been desired by secretary, ministry of minority affairs in nodal officers' meeting to increase the percentage share of lending to each minority community in proportion to their respective share in minority population," said the agenda note for a meeting of bank chiefs on Wednesday. In addition, it asked state-run banks to open branches in minority-concentrated areas to ensure proportionate credit flow.
Census 2001 figures for the population of various minority communities shows that they put together constituted about 19.5% of India's population. Muslims were around 69% of the minority population, Christians 12%, Sikhs just under 10% and the rest about 9%. While these shares may have changed somewhat in the 2011 census, yet to be released, they are unlikely to have changed drastically. Therefore, the new norms would mean that about 4% of all bank loans would go to Muslims, around 0.7% to Christians and 0.6% to Sikhs.
Against the stipulation, banks were providing 16% of the priority sector loans to minorities at the end of December 2014. Although the rule has resulted in higher flows to this segment following the UPA government's decision in June 2007, studies suggest that Muslims and Christians have not benefitted adequately, while some other minority groups like Jains, Parsis and Sikhs account for larger chunks of bank loans.
As a result, the minority affairs department has already flagged the issue to bankers and the finance ministry has stepped in now. "It has been desired by secretary, ministry of minority affairs in nodal officers' meeting to increase the percentage share of lending to each minority community in proportion to their respective share in minority population," said the agenda note for a meeting of bank chiefs on Wednesday. In addition, it asked state-run banks to open branches in minority-concentrated areas to ensure proportionate credit flow.
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