Treatment of informal sector financial activities including own money lenders in the SNA

At present the position of 1993 SNA on the treatment of activities of money lenders is not clear in that at para 6.134 it says that lending own funds in not production but at para 25 (Annex I) it is clearly mentioned that ‘money lenders who make loans from their own resources are also considered producers of financial services provided their services can be measured.’ Following the recommendation at para 6.134 of the SNA may lead to underestimation of GDP in developing countries where the money lenders who make loans from their own resources are quite prevalent. This paper proposes (i) to consider the activities of the own money lenders (who form part of the financial unorganized (informal) sector of the economy) as producers of financial auxiliary service in the system, (ii) money lenders be classified as unincorporated enterprises in the household sector and (iii) output of the services of own money lenders (informal financial sector) be computed as the difference of total interest amount received by the money lender and return to the money capital computed on the basis of the reference rate of interest.