Unemployed Youth Hit by Reluctant Banks

Banker’s hesitation in providing loans over “viability of projects” making it impossible for businesses to start or thrive

Published: 11th September 2015 03:24 AM  |   Last Updated: 11th September 2015 03:24 AM   |  A+A-

VISAKHAPATNAM :  Lakhs of unemployed youth in the State are struggling to get financial help to start off a self employment venture as bankers are not coming forward to provide any financial aid in the region. Though the government is insisting that bankers provide loan to all categories under the priority sector, bankers are following their rules strictly and rejecting majority of the applications.

As there are very less employment opportunities in both private and public sectors, most of the students are remaining unemployed even after completing their studies. These students are forced to apply for loans with the banks to set up for various self employment ventures. As an aid to the unemployed youth the government had framed various welfare loaning programmes like PMRY, CMEY etc., and had also announced subsidies. However, all such programmes have vanished gradually.

Moreover, the bank managements have tightened the rules and regulations to sanction loans. According to sources, the manager of the concerned branch should take up the complete responsibility of  recovering the lent fund. Even if the manager gets transferred to other branches, the responsibility of recovery is still attached to them. If the loan is not recovered, remarks will be registered against the managers.

“The applicants are not studying the viability of the business unit they decide to take up and apply for loans with partial knowledge. Because of political strategies, the government is imposing various rules on the bankers. They are insisting the bankers to provide loans, but no minister is willing to take up the responsibility of loan recovery. The applicants never pay the loan instalment regularly, in case of zero security loans. Therefore, the recovery part will be a never-ending burden on the bankers especially on the manager,” says a senior assistant general manager of a reputed national bank.

“In fact, there is no need of any recommendations or any collateral security to sanction loan for a viable business. By lending loan, banks can earn easy money, rather than collecting deposits, as the burden of interest lies on the bank in the case of deposits. The major trouble with loans is the viability of the business initiation youths come forward with,” he added.

Meanwhile, the SC, ST and BC corporations have declared that they will sponsor the applicant, only if they get the nod from the banker first. Earlier, the three corporations used to forward the applicants directly without receiving any prior consent from the bank.

“Even though there are several problems associated with the sanctioning of loans under self-employment schemes, Andhra Bank assists applicants who come under the priority sector. However, unless there is a future in the project against which fund is sanctioned, it is not easy for the branch manager to finance it,” said Lalit Prasad, deputy general manager, Andhra Bank.

However, no banker rejects an application right away. Thousands of applications are pending with the bankers. Meanwhile, believing that the application is under process, loan seekers are running anxiously from pillar to post. Applicants continue to allege that the bankers are rejecting every project they put forward in the name of viability.

Latest Govt Financial Aid

Recently Prime Minister Narendra Modi announced Prime Minister Mudra Yojana scheme, under which the entrepreneur can avail loan of maximum `1 crore. No collateral security is needed for loan amount between `1 to 10 lakh and sponsorship from the District Industries Centre is not mandatory as well. The scheme will be effective from September 25, about which a special credit campaign will be conducted by banks across the region.

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