New Delhi, 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, a fallout of exorbitant interest rate charged by 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 is a need for expanding rural 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 villages have access to banking services, it said.
Access to credit for the rural poor in India remains a significant challenge, AIBOC General Secretary Rupam Roy said.
The prioritisation of bigger 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 privatisation of nationalised banks and the trend towards consolidation under larger banking entities are not solutions to the underlying problems in the financial landscape.
Privatisation shifts the focus from social and financial inclusion to profit maximisation, leading to increased economic inequality, it said.
In a bid towards privatisation, the government changed their strategy and merged public sector banks (PSBs), bringing their number down to 12, it said, adding that this is a form of backdoor privatisation.
These steps were taken disregarding that the PSBs lifted the economy out of recession both during the global meltdown of 2008 and 2020 Covid pandemic, it said.
One of the most immediate consequences of PSB mergers has been 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.
