Mangaluru : The former Governor of Reserve Bank of India (RBI) D. Subbarao on Thursday asked bankers to break free of stereotypes of the poor and focus on getting them access to credit.

Speaking at the founders’ day lecture at the headquarters of Karnataka Bank Ltd., he asked bankers to understand the nature, psychology and sociology of poverty. “It is not just opening a bank account, creating facilities, and accessing technology, but it is about understanding poor people,” he said.

Giving an example of a stereotype, Mr. Subbarao said that during his tenure as RBI Governor he had met a woman who told him that she did not open a recurring deposit account in the bank in her village, as the tenure of the deposit did not meet her requirements. The bank manager did not alter the scheme to help her, as it was based on instructions from his headquarters.

Stating that many banks don’t understand basic aspects, Mr. Subbarao stressed on understanding the poor’s point of view. “I think we all suffer from several stereotypes about poverty, and how poor people manage finance,” he said.

“Another stereotype that bankers have about the poor is that they (poor) are concerned about the cost of credit. It is important to understand that access to credit is more important to them,” he said. With regard to the notion that the poor don’t know how to save their money, Mr. Subbarao said that they often engage in sophisticated financial engineering, precisely because “their savings are low, needs are high and they have emergencies to meet.”