Mint Road warms up to Yunus

RBI will look at having a charter to make credit a human rights issue.

The Reserve Bank of India is considering drafting a charter on "credit as human rights", inspired by the Bangladeshi micro credit missionary Muhammad Yunus.

"The (RBI central) board will look at having a charter to make credit as human rights," said RBI Governor Y V Reddy, after Yunus, on a visit to India for the first time since winning Nobel peace prize for pioneering lending to the poor in Bangladesh, delivered a lecture on the theme "Credit as Human Rights".

Reddy said the board has many members who have knowledge and expertise in microfinance. Elaborating on the concept of credit as human rights, Yunus said financial sector entities should start with the belief that credit should be accepted as a human right, and build a system where one who does not possess anything gets the highest priority in getting a loan.

"Poor are not responsible for their poverty. It is imposed on them by systems and policies and to help people to get out of poverty . we have to fix systems", the Nobel laureate said.

There is insistence on collateral, a sort of security, by banks to lend. The absence of collateral meant a person becomes "credit unworthy". He rued the current system which unfortunately seems to send out a message that "if you have money, more you get it."

Just 2 per cent of the people get 98 per cent of credit. "We need a credit reform" which will ensure every person has access to credit, Yunus said.

Banks seem to be influenced by a thinking that money once given to poor will never come back. This has been proved wrong by experience in microfinance where repayment rates are over 98 per cent.

"Banks have fantastic social power at their command. They can decide whom they can provide assistance to. This power can be used to change the lives of the poor, he said.