Stringent requirements leading to rejection of loan applications: Amit Mitra to Sitharaman

In a letter to the Union Finance Minister, Nirmala Sitharaman, on Monday, Amit Mitra, the former finance minister of West Bengal and the present principal chief adviser to the West Bengal CM, said that the central government's and the RBI's "stringent notifications" had resulted in the rejection of loans to weavers and craftsmen in the state. He pointed out that around 40,000 weavers and artisans have been denied loans because of this.

The rejection rate for weavers has been 66% and that for artisans has been 62% he said.

In his letter, Mitra argued against requiring PAN submission from microentrepreneurs whose income was significantly below the taxable limits and requested to instead allow self-certification. According to him, it is these requirements that is leading to such massive rejection rate. The letter comes as Kolkata hosts a three-day G20 meeting on financial inclusion.

"Your urgent intervention is critical for 'financial inclusion'" of the entrepreneurs from the bottom of the pyramid. I humbly urge you to persuade both RBI and MSME department of GOI to rectify the notifications and allow self-certification by weavers and artisans for bank loan applications, as was the case in the initial notification," he wrote.

He also claimed that these notifications have hindered bankers from providing these micro-loans and have resulted in rejections of otherwise easy and prudent lending.

"This is even more pertinent at a time when G20 is been held under India's presidency. You are aware the G20 nations, have made financial inclusion of SMEs and micro enterprises as their focus area in the global action plan," he wrote.