Micro finance: Need of the Hour for Bihar

Bihar is on the path of economic recovery. The big picture looks assuring. Roads, health and education have improved tremendously. Though same cannot be said about certain areas like people’s need for credit. Biharis are talented and hard working people and need the state and infrastructural support. For lack of finance they are not able to open businesses, improve agricultural/manufacturing practices and generally better their productivity. Banks have woefully lagged behind in providing credit facilities to people of Bihar. There is a PIL in Patna High Court about abysmally bad credit-deposit ratio (CD Ratio) alleging that banks have not honoured the RBI mandated CD ratio. The banks prefer to dole out personal loans /car loans and housing loans more than real agricultural loans if it is not The Punjab!
Bangladesh has shown that poor and the poorest can be trusted for loan servicing more than rich. They need small amounts to manage small needs and most certainly return the loan as they associate pride with that. That’s why the micro finance experiment was such a success in that poor country. Same can be replicated in Bihar. There would be little adjustment here and there.
Bihar is rich in alluvium and has the largest fertile land tract in the country. Anybody who has a bigha or two of land will never go hungry. You must have noticed that unlike AP and Orissa, there were no hunger deaths in the state. And yet millions of Biharis are migrating despite owning some land and opportunity to live a dignified life. Given some cheaper and reliable credit most would have lived in the state and earned. But that was not to be. To buy some agricultural implement or buy a cart to sell goods or buy a pair of oxen to till the land or take the vegetables to the local market or may be tide over a medical emergency. The banks will never tender loan for these things as they consider them unreliable customers. That’s the thing that SHGs and microfinance will solve for all.
Government must evolve and encourage ways to promote this. Most Biharis are skilled as they migrate outside Bihar to work in mechanized fields and factories and have acquired some skill. This should be made use of. If they are given financial help then they do wonders. Government must adequately advertise the scheme and provide and we shall see scores of Biharis returning and making Bihar a success story.