The role of micro-finance in a country like us is tremendous and in a society where a vast section of the populace is condemned to a subhuman living micro-finance can a go a long way in significantly reducing the number of poor people. It can be a powerful tool towards empowerment. The question that should agitate our minds whether our nationalized commercial banks which are required to deploy a certain percentage of their deposit to meet the norm of priority sector lending have discharged their social obligations in this regard. It is logical enough for commercial entities to be guided by commercial prudence and judgement while disbursing loans to those who need them. But an interesting aspect in the Loans and Advances portfolio of most of the Public Sector Banks is the presence of non-performing assets which is also described as NPAs in an abbreviated form representing large-scale defaults by corporates and individuals in repaying their loans.

What is disturbing, is the fact that in most cases these banks are saddled with this sticky portfolio of loans which are sanctioned and disbursed on sticky collaterals and in collusion with corrupt bank officials and sometimes under political pressure. Thus our good money goes into feeding the greed of a few. The most of the defaulters are all powerful corporate houses and individuals who come to the bank with a predetermined motive to swindle the banks.

But look at the reality when a poor and needy visits a bank with a request for a small loan to sustain a livelihood. He is subjected to all kinds of grilling and is pressed hard to produce a collateral security.

Micro-finance can be a solution to solve the credit needs of the poorest of poor. They are the people who have no means to provide collaterals but they are honest enough to repay their loans. Dr. Mohammad Yunus, nobel laureate, a highly respected figure and a pioneer in the field of micro-finance. He has ushered in a revolution in Bangladesh by setting up Gramin Bank which is owned by the borrower and caters to the credit needs of the impoverished people in the rural areas. Under his able leadership the institution has gone from strength to strength.

It does not insist on any collateral and instead of borrowers coming to the bank for it the banks knocks on the doors of borrowers and it is run on no-profit-no-loss basis and a spectacular loan repayment.

In a recent interview Dr Yunus has expressed his disappointment over the state of affairs of micro-finance in India and has described the performance of our banks to be out of sync with Indian realties. He went on saying these banks are equipped to meet the needs of a “Cargo Ship” not that of a “Dinghy Boat”!