Leftists and economics/basic mathematics can never go hand in hand – here’s yet another proof of this fact. First it was Newslaundry which confused “Purchasing Power Parity” (PPP) with “Public Private Partnership” (PPP) while discussing India’s GDP rankings in a video on their YouTube channel. Now it is the turn of their counterpart The Wire.
In a video from their series “Crackonomics” titled “Is Our Banking Model Failing Aam Aadmi?” that raised “critical concerns about India’s banking system” and its alleged tilt away from the common man, one specific segment was fallacious.
The segment claims small loans to poor borrowers declined sharply from 94% in 1991 to just 15% in 2025.
The anchor says, “Then comes the matter of loans, since 1991 the number of small loans has been falling. Thomas Franco, former general secretary of All India Bank Officers Confederation, told how the decrease in small loans is a matter of concern. In 1991, loans up to Rs 25,000 were being given to 94% borrowers and their outstanding was 22%, meaning these small loans were usually recovered easily and did not become bad debt. Also, loans up to Rs 2 lakh were being given to 99% borrowers. Overall, the doors of banks were open for the common man. Then comes the year 2001 when the number of loans up to Rs 25,000 decreased to 71.7% while the borrowers were repaying them on time, only 7% were outstanding. By 2014, loans of Rs 25,000 or less were reduced to just 23.5% and loans up to Rs 2 lakh also came down to 78.4%. Now in 2025, loans up to Rs 25,000 have reduced to just 15.3% and their outstanding amount is just 0.2% of the total outstanding amount. Overall, the money given to the poor man is decreasing.”
From geniuses at the Wire!
Poor are getting less and less bank loans
% of loans below Rs 25000 fell from 94% in 1991 to 71% in 2001 to 23% in 2014 to 15% in 2025
Because Rs 25000 in 1991 is same as Rs 25000 in 2025
🤣
Like IQ of liberals, inflation is imaginary pic.twitter.com/jFUlnXlkDf
— Abhishek (@AbhishBanerj) July 1, 2025
Now let us tell you why this is wrong or based on a wrong understanding.
While the video argues that loans of ₹25,000 or less accounted for 94% of borrowers in 1991, dropping to 71.7% in 2001, 23.5% in 2014, and finally just 15.3% in 2025. However, what it fails to acknowledge is that ₹25,000 in 1991 had significantly more purchasing power than it does today.
Using conservative inflation estimates (6–8% annually), ₹25,000 in 1991 would be roughly equivalent to ₹2.5 to ₹3 lakh in 2025. This means that a ₹25,000 loan today is no longer “small” in the same way—it is microscopic.
Without accounting for inflation or economic growth, the video makes an apples-to-oranges comparison that creates an illusion of decline where there may be none—or at least, not to the dramatic extent claimed.
If the video aimed to honestly track how banking access for the poor has changed, it should have:
- Adjusted the loan threshold for inflation, comparing loans under ₹2.5–3 lakh today with ₹25,000 loans in 1991.
- Tracked the real value of small-ticket lending using inflation-adjusted brackets.
- Examined how many borrowers in 2025 are getting loans up to ₹3 lakh, rather than rigidly sticking to the ₹25,000 cut-off.
With such a methodology, we would get a clearer picture of whether access to credit for the poor has genuinely shrunk—or just evolved in size as the economy matured.
Another way of looking at this issue is to understand how things have changed over the years.
Yes, regular banks have reduced tiny-ticket lending (≤₹25,000), but not because the poor are getting less credit. Instead, the market has shifted to:
Microfinance Institutions (MFIs): MFIs now serve 10 crore+ borrowers with loans of ₹10,000–₹50,000. Interest rates are higher (18–24%), but approval is faster than banks.
Government Schemes such as PM Mudra Yojana, PM Svanidhi
Mudra Yojana: Since its launch in April 2015, the Pradhan Mantri Mudra Yojana (PMMY) has sanctioned over 52 crore loans worth ₹32.61 lakh crore.
PM SVANidhi: Launched in 2020, the scheme offers collateral-free loans of ₹10,000–₹50,000 to street vendors with a 7% interest subsidy and ₹100 monthly cashback for digital transactions. It aims to formalize vendors, boost digital adoption, and support their economic mobility, recognizing their vital role in the urban informal economy.
Fintech & Digital Lenders: Apps like PayTM, PhonePe, and KreditBee offer instant small loans (₹10,000–₹3 lakhs).
The claim that “loans to the poor have collapsed” is misleading because it ignores inflation (₹25,000 today is far less valuable) and also the available alternatives (MFIs, govt schemes, fintech).
The truth is that the poor have more credit options than ever—just not all from traditional banks. The real debate should be about fair interest rates and regulating MFIs, not a false “banks vs. poor” narrative.
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