Srinagar: Blaming financial institutions for their ‘lack of functioning’ Jammu and Kashmir Finance Minister Haseeb Drabu Thursday said that ‘Mudra’ scheme is an ‘indictment of the failure of banking sector’.
Drabu was speaking over the opening ceremony of Mudra Protsahan Abhiyaan here at SKICC. The ceremony was also attended by Minister of State, PMO, Jitendra Singh, and J&K Bank chairman, Parvaiz Ahmad.
“The scheme is the indictment of the failure of banking sector because Prime Minister Narendra Modi had to intervene himself to get banks to lend loans at small interest rates through Mudra,” Drabu said while urging financial institutions to evolve their credit system in light of new technology.
Drabu said the Mudra scheme doesn’t subsidise, bringing in subsidies and tax waivers erode the culture of entrepreneurship, or give free loans to aspiring entrepreneurs but it will leverage the current banking infrastructure and technology so that the government is not burdened and enough traction is generated to create viable entrepreneurship
According to Drabu once there is access to ‘credit for an aspiring entrepreneur’, next step would be the ‘demand for credit’.
“Mudra will provide access to credit by leveraging positions. The scheme will create securities in the mind of young entrepreneurs which will allow him to take risks that forms the basis of entrepreneurship. If risk mitigation is done, you will find a lot of appetite,” Drabu said, while adding the said.
Urging banks to simplify the process of giving loans to small enterprises, Drabu said entrepreneurs fail not because of bad business model but due to social and domestic compulsions.
“Mudra will try and restore balance by helping a banker understand where the intervention is required. There are millions of small enterprises in India which contribute 46 percent to manufacturing output and 44 percent to exports, yet they get only eight percent credit while their credit-to-GDP ratio is less than three percent,” he said.
