AIBOC Calls for Financial Inclusion to Avert Farmer Suicides

The All India Bank Officers' Confederation (AIBOC) has highlighted the urgent need to expand financial inclusion and meet the credit needs of small borrowers, especially in rural areas. AIBOC stressed that high-interest rates from NBFCs and money lenders lead to farmer suicides and economic inequality. Privatization and consolidation of public sector banks have adversely impacted access to credit for SMEs.

Bank officers' union AIBOC on Thursday emphasized the critical need to enhance financial inclusion and address the credit needs of small borrowers.

Reports have emerged from various parts of the country about farmers committing suicide due to exorbitant interest rates imposed by NBFCs and money lenders, alongside unremunerative product prices. On the eve of Bank Nationalisation Day, the All India Bank Officers' Confederation (AIBOC) issued a statement urging the expansion of the rural banking sector to shield poor farmers from exploitative lending practices.

According to recent data, only about 74,000 villages in India have access to banking services. AIBOC General Secretary Rupam Roy pointed out that access to rural credit remains a substantial challenge as larger banks, post-merger, prioritize bigger clients, forcing smaller businesses towards NBFCs.

The higher interest rates and potential exploitation in the NBFC sector place significant financial burdens on SMEs, limiting their growth and sustainability. Highlighting that privatisation of nationalised banks and consolidation under larger entities are not solutions, Roy stated that such measures shift focus from social and financial inclusion to profit maximization, exacerbating economic inequality.

The recent mergers of public sector banks, which reduced their number to 12, are an attempt at backdoor privatization, the statement added, despite PSBs' role in lifting the economy during the global financial crisis of 2008 and the 2020 COVID-19 pandemic.

The immediate impact of these mergers has been the reduction of PSBs' market share, decreasing from 66 percent of total deposits in 2017-18 to 59 percent by December 2023.

(With inputs from agencies.)