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  • Category: Miscellaneous

    Creating an institutional infrastructure for small loans

    It is estimated that over sixty lakh people are engaged in the informal sector. They sell vegetables door to door or unbranded textiles. A large number of them operate small eateries from their houses. They manage to make around Rs.300 or Rs.400 on a normal day. However, post-COVID, they are mostly in distress, as the country is under lockdown in many places.

    There is absolutely no clarity as to how these people can get the Rs.10,000 loan announced by the Union Finance Minister. It is here that the concept of self-help groups can make a big difference. Given the fact that these self-help groups have to elect their own office-bearers and have an institutional framework, it is wise to organize all local traders under one single umbrella and then the local co-operative urban cooperative banks can take over. The rules have now changed and the RBI has powers to control such banks.

    When there is an institutional framework, it becomes that much easy to get things done.

    This is my entry for the a thread a day challenge contest
  • #702667
    I do agree with the author that unorganized small time business sector need to be given thought as most of the people are living on their life by selling daily materials through their own effort. I do agree that the banks should come forward in a big way to help them by giving short term loan at nominal interest and the amount payable daily. I have seen in Hyderabad some cooperative banks are extending loans up to 10,000 per day to push card vendors. street vendor, vegetable vendors and even small time traders. They would collect daily money ranging upto 300 to 500 based on their loan borrowing. This is easy for the daily traders as they have to pay money for the purchasing made in the morning and by evening the products would be sold and they get their profit margin along with the principal amount to be paid.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #702670
    It is true that the daily wages people are hit due to the COVID 19 pandemic and many of them have lost their jobs and they are struggling to lead their life. Government's 10,000 RS does not have much impact on them. So it is wise to introduce some small sector business loans which less interest rate, so that they can pay it at the right time. Try to give some training in setting up a self business shop. The government must provide some aid to stretch back their life in the normal routine.
    "Earning knowledge is by sharing it with ISC and we will rectify our mistakes."

  • #702709
    A good thought when we look at the present situations and people finding it difficult to make a living. It is very difficult to get the benefits of many schemes that are announced by the government due to various reasons and when such an institutional framework is made, they will be able to know the problem faced by such small traders or informal sector. Many make a living by selling vegetables, fruits, flowers, roadside eateries, toyshop, cobblers, cloth sellers, etc who make a living by selling such small and cheap everyday products is finding hard to move as days are passing. By bringing all local traders under one single umbrella, electing their office-bearers, using the local co-operative society or urban co-operative banks to take over, the schemes or funds allocated for their help in terms of aid or loan can be distributed to the much-required masses and be assured that they will get the help due to the local and self-help groups involvement.
    “The most important thing in life is to learn how to give out love, and to let it come in." — Morrie Schwartz

  • #702710
    The institutionalisation of business is always a better way of doing business. We know Hamalis who will be doing loading and unloading jobs. There are no salaries for them. But they made a union and framed some rules and regulations and the employer who wants to employ them should honour their terms and conditions. That has given them some respect and a system in employing them, Similarly, these street vendors can form as self-help groups and they can select their own office bearers and they can deal with the loan sanctioning authorities and see that these groups will get the loans announced by the government. The author's idea is good and should be appreciated.
    always confident

  • #702876
    The small loans or MSME loans and credit system are running since many years. They are made customer friendly by various modifications and changes. By the present package scheme the government encourages lending institutions to lend to these deserving and needy people by indirect schemes. That is, the lending institutions will be encouraged to lend by the designated institution refinancing the ending institutions. The borrowers also may get soft terms in interest, repayment, security, margin(own contribution) and repayment. The government issues broad guidelines from its relevant ministry and department. The RBI and banking department may issue further details. The Indian Banks Association also issue clarification and guidelines to banks staying within the government policy and guidelines. The deserving eligible people can approach their banks. There are already infrastructural and institutional frame works in this regard.

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