There are many banks in India which show reluctance to lend money to the poor. This is in turn is effecting the implementation of Prime Minister Manmohan Singh government’s financial inclusion scheme.

The Reserve Bank Of India (RBI) has found that about 9% of the banks out of 92,690 in India are the most reluctant in lending. The credit ratio is less than 25% and loan disbursals through these offices fell by 15.4 percent year by year to December 2011 against a 4% rise in the corresponding period in 2009-10.

People who have limited access to institutional credit borrowed even less last year amidst the slow economy and lesser opportunities to engage in economic activities. On the other hand, banks have created the infrastructure to reach out 74,200 odd villages in the last couple of years, but these are yet to turn in to profit centres despite the fact that they have opened crores of no-frill deposit accounts.

Such branches are yet to earn any meaningful revenues in the absence of any big lending activity. Moreover, they also do not offer remittance facilities or sell risk covers which are other avenues of earning revenues.

At present the regional rural banks are the only group which reported a rise in lending through their most reluctant branches.