With thousands of households being affected by COVID-19 across the State, and several losing the sole breadwinner to the coronavirus, many have opined the need for the State government to step in and either revive the Telangana State Minorities Finance Corporation’s bank-linked schemes or hand out grants to save them from falling into debt.
In what points to the effect on families post-COVID-19 infection, Helping Hand Foundation, an NGO, conducted a survey of over 7,000 households in neighbourhoods of the southern part of the city recently, and found that several students had dropped out of school, and many blue-collar workers had taken to daily wage earning. It also found that over 100 families had to resort to seeking alms. It is against the backdrop of a massively shrinking household income that activists have sought better access to credit. The TSMFC, an institution known for facilitating this, gives through its bank-linked schemes loans between ₹ 50,000 and ₹ 10,00,000, with a subsidy from 100% to 60%, depending on the slab. No new call for loan applications has been given since FY 2014-15.
According to a chapter authored by Ch Sankar Rao in the recently-released book Muslims in Telangana (MiT) - A Discourse on Equity, Development and Security, Muslims households in the State have lesser access to all forms of credit as compared to the majority community, 61% as compared to 71% respectively. Further, only 25.5% of Muslim households have accessed loans from institutional sources. On account of the lack of access to credit from such sources, Muslim households managed to obtain loans from relatives and friends, the chapter states.
The chapter also reveals that “the weighted average annual interest rate of all loans by a Muslim household in Telangana stood at 20.7% which was more than that of Hindus (15.8%)”. The author suggests a strengthening of the TSMFC.
Development economist from the Centre for Development Policy and Practice Amir Ullah Khan, one of the four editors of MiT opined that there is a need for the State government to hand out grants like Rythu Bandhu to keep COVID-19 affected families from falling into the debt trap.
“₹ 4,000 to economically vulnerable persons should be given. When we talk about bank-linked schemes, the issue is that micro-financing institutions are looked at as banking institutions and banking norms are applied to them. There is a huge difference between an applicant who takes big loans and one who takes micro-loans. The former has legacy, leverage and assets, the latter has nothing of this sort. The former is business-oriented, the latter is livelihood oriented.”
Activist S Q Masood pointed out that it was a double whammy for many households. They were affected by floods last year as well as COVID. “Many families are in a precarious position now. Institutions like the TSMFC were created to disburse loans to minority communities. It is important that they be revived at the earliest, and loans be given. Access to credit will help people greatly,” he said.
A source from the TSMFC said that while no new applications have been called for, the institution is dealing with a huge backlog of over 1.2 lakh applications. “The corporation has not stopped loan disbursal, though no new applications have been called for. We have requested ₹ 95 crore for loans from the government as special budget and are hopeful of a positive response,” the source said.
