Faith-based lending

Bad secularism meets bad economics

One of the successes of the post-1991 economic reforms has been India’s banking system. In those numerous comparisons with China, the banking system is held to be an area where India does better. That’s because while Chinese bank lending is directed by the government, liberalisation allowed Indian banks to lend based on the merits of the borrower—essentially, the capacity to pay back the loan and interest.

And now, the man who ended up receiving the credit for those reforms is presiding over a government that is determined to undo them. Indian banks, the UPA government has directed, must set aside 6% of their total loans to, well, people belonging to religious minorities.

In the irresponsible hands of the UPA—its most brazen exponents—communal socialism, as Offstumped calls it, is on the march. Yet another reason why the kept prime minister must go.

18 thoughts on “Faith-based lending”

  1. The ET report says that there has been no complaints of discrimination against minorities in the disbursement of loans till now.

    Now with this vote bank appeasement directive, the banks’ NPAs are only going to increase.

    Where is this going to end?

  2. While I have not the read the news report in question,it is a fact that many muslims living in ‘ghetto’ areas even if they are well placed professionals are unable to get home loans etc.This is because they live in ‘ghetto’ areas e.g. Okhla in Delhi .The reasons cited by the banks are high default rates.
    There have been persistent complaints about this within middle class muslim circles.

  3. history_lover,

    That problem is faced by anyone who does not have a clear legal title to property. And do you think reserving loans for religious minorities will help slum-dwellers get the loans? Or will it help the well-connected or those who would have gotten loans anyway?

  4. At how many points below the prime lending rate are such loans to be given? Like RS says, the non-performing assets of the banks is set to rise and this could prove to be an irrecoverable damage at this juncture when home loan rates are going up north and there is a general fear of economy slowing down.

  5. Sriram,
    Not only will the NPA rate rise but it will cause interest rates to be higher for the rest of us not fortunate enough to be in some religious minority. When will the UP elections get done with and some semi-sanity return to desi polity?

  6. “‘Ahem. Are atheists a religious minority?’

    Nooooooooooooooooooooooooooooooooooooooooooooooooo”

    I am not so sure. They sure are dogmatic that they know the truth – #1 quality of some religions!

  7. Atheists are a religion by themselves, no doubt about that. But in places like TN, they outnumber any other religious group and are a majority 🙂

  8. Chandra, Sriram

    I am not sure

    Athiests can be dogmatic like Communists (or Roarkist) but religion (usually) implies* declaration of belief in existence beyond normal conscious (and perception)as starting point. I am not not sure what is the starting point for Atheists

    *Again methinks Buddhism goes in opposite direction.

  9. Atheists start with an equally dogmatic belief that god does not exist while agnostics are the ones who question and are doubtful of god’s existence. They dont deny the existence of god and are open for proofs.
    But not all religions start with “accept that there is a God beyond your perception” premise. That is typical of Abrahamic religions I think.

  10. Sriram,

    I will say it is a bit of stretch to equate non existence with existence. If anything the burden of proof lies on the believers.

    Also I think it is opposite for Abrahamic religions (God created man in his own image)

  11. Hi all,

    My mistake, for I thought the discussion will be about the absurdity of lending based on faith. Discussion on atheism is actually off-topic. Since I started it all, I must apologise to everyone, and humbly request commenters to return to the topic.

  12. NOW! i feel truely angry for Afzal.Not for,because he attacked the Parliament.I am angry because He didn’t finish his JOB,for what he had started at the first place.

  13. But what if there are not enough people who want the loans… Would the banks go knocking doors in slums and thrust the cheques in their hands..
    If the banks actually start giving the 6% (reserved?) loans after checking creditworthiness, they will actually default. And probably sent to the gulags by our secular terrorists.

    Stupid secularism!!!

  14. Gaurav, Sriram,

    Since Nitin has put the brakes on any further discussion, my response will have to wait another day. I will just say this, considering Nitin’s point about soft loans, I think atheists belong to a persecuted religious minority. 🙂

    Now I will shut up.

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