Jammu, January 11 (Vijay Kumar) – “Unless banks show desired level of inclination for liberal funding, benefits will continue to elude the poor and needy”, J&K Minister for Finance, Abdul Rahim Rather said while speaking at the 78th State Level Banker’s Committee meeting held in Jammu on Monday.
He enjoined upon the banking institutions to improve their Credit Deposit Ratio (CDR) with special focus on agriculture and micro credit sectors. Rather said that Banks shall have to show substantial improvement in providing adequate and hassle free lending facilities to priority sectors instead of only accumulating deposits, failing which they shall have to face strict action. “The prevailing tendency among the Banks amounts to flight of resources, which the State cannot afford”, Rather added.He said that the State accounted for 0.70% of the country’s GDP and yet it was absorbing only 0.30% of the total national credit, thus leaving a huge scope for the Banks to enhance their credit.
While urging the Banks to set targets thoughtfully, the Finance Minister said while advances under agriculture include crop loans only to the extent of 28.72% in financial terms, the Banks have exceeded their lending targets in housing sector by huge loaning that too irrationally between various districts, with Srinagar district alone accounting for 35.45% of the total lending in the housing sector. “I would advice the Banks to ensure that lending to this (Housing) Sector doest not contribute to violations of Master Plan and building bye-laws”, Rather said.
Reviewing working of Banks, Rather said that while deposits have grown by 15.61% between September, 2008 and 2009, advances have grown only by 8.34% the CD Ratio in first 6 months of the current financial year has been reported at 46.70% compared to 49.84 during the same period last year. This is again a disturbing trend particularly as this period has been very peaceful in the State compared to 2008 and Banks should have shown substantial improvement in their advances to obtain improved CD Ratio.
Rather said while the J&K Bank has continued to maintain lead in aggregate credit, its CD Ratio too has shown decline from 59.45% to 56.45%. The Banks while mobilizing deposits has a responsibility towards credit expansion within the State prioritizing the agriculture and micro-credit sectors. The other Banks too need to concentrate on agriculture lending to lift the present level of aggregate credit from 11.52% to the National bench mark of 18%.
Rather also called upon the Banks to improve their performance under Kissan Credit Card (KCC) Scheme to enable farmers get hassle free crop loans. Effective implementation of KCC scheme shall help the Banks to use their outreach to cover 37.53 lakh workers, if a time bound special campaign involving Banks, State Government machinery, Panchayat Raj Institutions and Civil Society is undertaken, the Minister added. He also called for implementation of RBI directions to provide Banking Services in each village with a population of over 200 souls adding that there exists a vast scope for Banks to expand their credit to rural sector. “I am personally of the view that as long as agriculture sector does not receive its due share and accommodation in the credit delivery schemes of the Banks, financial inclusion is not going to show any tangible improvement”, Rather said.
Hoping that “the deliberations in meeting would devise ways and means to help make state’s economy strong and vibrant, Rather asked the heads of various Government departments to provide full cooperation to the Banking sector, adding that he would personally monitor functioning of the Banks and allied departments and review Bank wise performance in the next SLBC meeting.
Chief Secretary, S. S. Kapur, Chairman, Jammu and Kashmir Bank, Dr. Huseeb Drabu, Principal Secretary Industries and Commerce, Anil Goswami, Commissioner/Secretary, Finance, ; Sudhanshu Pandey, Regional Director, Reserve Bank of India (RBI),, Arnab Roy, Commissioner/Secretary, Planning and Development, B. B. Vyas, Executive Directors of J&K Banks, heads of various Banks, Administrative heads and heads of various Government Departments were also present in the meeting.
Chief Secretary called upon the Banks to formulate concrete and result-oriented action plans and urged for launching a sustained awareness campaign about various schemes of the Banks adding that Differential Rate of Interest (DRI) scheme also needs to be popularized among the messes, which is aimed at catering to the poor classes of the society including BPL families where loans at 4% rate of interest are available for engaging in productive and gainful activities.
Commissioner/Secretary Finance also suggested the SLPC to monitor credit disbursement for the urban poor under centrally sponsored scheme Interest Subsidy for Housing, the Urban Poor (ISHUP) where performance in J&K is for below satisfactory levels. Underlining the importance of financial inclusion as advised by the Reserve Bank of India, Finance Secretary also asked the Chairman/convener SLPC to undertake implementation of electronic Benefit Transfer (EBT) scheme to cover entire population of the State particularly those living in rural areas and under privileged people.
Dr Haseeb Drabu, Chairman J&K bank and Convener SLBC made a detailed presentation at the start of the meeting. He dwelt upon credit scenario in the state and off take under priority sector upto Sep 2009. Dr Drabu said that though the CD ratio of the state has appreciably increased over the last five years but it is only driven by J&K bank which has improved its CD ratio from 30% in 2001 to 53% in 2009.