The issue of private money lenders in India has shown its ugly face every now and then. These money lenders are most of the times unauthorized individuals. They charge exorbitant rate of interests. Usually, the needy poor people are the ones who fall prey to these money lenders.

But, most of the times, due to interest going beyond the principal amount of money taken on loan, the hapless borrowers are unable repay the loan. This results in loss of whatever meager belongings possessed by the poor borrowers. Many a time, instances have come to light where such poor borrowers  commit suicide due to loss of small house or a piece of land taken over by the money lenders. More so, if the borrower happens to be a farmer, he has other reasons like failed crops or fallen crop prices, which further add to his miseries.

To deal with this situation, the Central Government has come up with a plan, where in easy loans will be extended to poor rural people.

Micro-credit Programme:

As per this plan, loans upto Rs 100,000 will be made available to the poor households in the country. Under this, a micro-credit programme for rural households will be activated. This is expected to bring people out of poverty and loan trap.These loans would be given with subsidised interest rates and would be collateral-free. It will be activated in the next three to five years throughout the country.

Reach of the Scheme:

About  8.5 crore ( 85 Million) poor households have been identified for this scheme. By 2019,the Socio Economic and Caste Census would also be linked to the scheme. The Government aims  to lend Rs 60,000 crore per year    to create livelihood for poor rural households in next two years.

The Goal of the Scheme:

The Government aims to decrease the dependence of poor households on local moneylenders as well as microfinance companies. These charge high interest rates when compared with 11 per cent interest by banks.

To deal with this, the Rural Development mMnistry would provide an interest rate subvention of 4 per cent. This would make loans available at 7 per cent to the poor households.  Further, if repayment is made promptly by these households, the additional interest subvention of 3 per cent would be provided in 250 backward districts of India.

How poor will benefit:

The poor and deprived  households will be provided loans for activities including farming and erecting  poultry farms and goat sheds. A memorandum of understanding has been signed by Union Rural Development Ministry with the Agriculture and Animal husbandry Ministry in this regard.

The poor will get the benefit of simplified loan accessing process. As per this, diversified livelihood opportunities will be created and  loans will be provided. This will enable the households to make use of  their available skills and resources.

Existing Efforts at Village Level in Country:

To deal with the local money lending issue, the self-help groups grew 40 per cent during 2015-16 to raise Rs 30,000 crore for rural credit in  country. Such self-help groups have mobilised credit of about Rs 70,000 crore from the time these came into being in 2011. These have  funded creation of social capital in villages to uplift jobs in non-farming areas.

The government has already been expanding dairy activities in various  states with collaboration of  National Dairy Development Board. It  provides superior  market  connectivity as well as brings together producer groups and the companies.

These efforts apart, the proposed new Micro-credit Programme will certainly help to rescue rural vulnerable households from the clutches of the local money lenders and take their lives in positive direction.