There have been accusations in some quarters, not all of them well-informed, that the banks are lending money heavily for purposes of consumption and for purchase of durable consumer goods. I do not see any harm in banks helping their clients of middle class and lower middle class to buy some selected articles for daily use, but it will have to be ensured that easy loans are not made available for luxury goods consumption and unproductive expenditure. It will be necessary for the banks to so formulate their schemes for diversified small lending as not to create an impression that the affluent classes are being helped to have more conspicuous consumption, while many socially and economically productive needs of the poorer people remain unsatisfied.
In regard to your lending programmes, I would like to invite your pointed attention to an important area of action. One of the major problems we are facing today is growing unemployment. The unemployment of educated and technically qualified youth is not only a human problem but also an economic problem. The investment on education of these youths has not been able to give adequate returns to the country. I would, therefore, urge all of you to treat this as a priority area of action. I am aware that there is no ready-made and short term solution to the problem. But the social, economic and human compulsions would call for a sympathetic understanding and keen awareness on the part of all those who are connected with the banking industry. A more imaginative and constructive approach will be necessary in helping the young technicians and educated youth to enable them to set themselves up in life. I understand that some banks are making loans available to the self-employed persons on reasonable terms but some others have taken somewhat rigid attitudes. Today I propose to put before you a proposal which has considerable significance in terms of social objectives which I mentioned earlier. As you are aware, poorer and backward sections of our society have been suffering at the hands of usurious money-lenders who charge interest at rates as high as 3 to 5 per cent per month. Private money-lenders have their own old roots in society, they know their customers very well and their attitudes to questions' like security against loans are subjective and flexible and not bound by any rules. Though banks may take time in evolving methods to surmount the obstacles traditionally associated with institutional lending, purposeful consideration will have to be given to this problem.
