FM asks CMS and Bankers to Improve Credit Flow for Housing, Weaker Sections,Minority Community and Education Loans
FM asks CMS and Bankers to Improve Credit Flow for Housing,
Weaker Sections,Minority Community and Education Loans
FM Calls for Integration of Financial Literacy and Financial Inclusion with the Technological Development of Banking Infrastructure in Rural and Semi-Urban areas
Union Finance Minister Shri Pranab Mukherjee has asked the state governments and bankers to position themselves to finance the emerging demand for credit from different sectors including agriculture, manufacturing and services sectors in their respective regions. He further asked them to make serious efforts to improve the credit flow to housing, weaker sections, minority communities and education loans and closely monitor them through state level bankers committees. The Finance Minister was addressing the Joint Meeting of the Chief Ministers of Central and West Zone States and CEOs /CMDs of public sector banks and Financial Institutions in Mumbai today.
The meeting was attended by the Chief Ministers of Maharashtra, Rajasthan, Madhya Pradesh, Goa and Finance Ministers of Chhattisgarh and Administrator of Union Territory of Dadar and Nagar Haveli, Daman & Diu and Principal Secretary, Finance of Gujarat State. The meeting was also attended by representatives of RBI and NABARD.
The Finance Minister said that there is a need to ensure that financial literacy and financial inclusion is integrated with the technological development of banking infrastructure in rural and semi –urban areas. He advised the banks to convert savings from semi-urban and rural markets into financial assets through effective financial inclusion. He also stressed on effective implementation of Aam Admi Bima Yojna and Co-contributory Pension Scheme ‘Swavalamban’ as these are important priorities before the government.
This was the second such meeting held with the Chief Ministers and the bankers by the Finance Minister outside Delhi. The first meeting was held on 14th June, 2010 in Patna with the Chief Ministers of East and North-Eastern States and Bankers. The Finance Minister said that the next meeting will be held with the Chief Ministers of Northern Zone and Bankers in Chandigarh early next month.
The complete speech of the Finance Minister made in the meeting in Mumbai today is given below:
“Hon’ble Chief Ministers, Minister of State for Finance Shri Namo Narain Meena, CMDs of Public Sector Banks and representatives of Central and State Governments, RBI, NABARD. First of all, I extend my heartiest welcome to all of you present here today for attending this meeting. It is significant that we are holding the meeting at Mumbai, the financial capital of India. However, we are aware that for long, the financial sector had ignored the needs of the poor, the marginalized, the small farmer, the micro entrepreneur and others like them who exist not very far and also within the city. I have carefully chosen the agenda items today to focus attention on issues affecting such classes of people. You will agree that there is urgent need for including people from all strata in the mainstream banking system and for putting our country firmly on the path of overall growth and development.
A similar meeting was convened recently for the Eastern Zone States in Patna. The focus on delivery of credit to the poor was of primary concern there. We could discuss area specific issues and fix time-lines for improvement there. We hope to achieve a similar objective today, as well, and expect your active participation in the process.
At the outset, I would urge the State Governments and Bankers to position themselves to finance the emerging demand for credit from all sectors in this region, whether from agriculture, manufacturing or services. We have here today an interesting variety of States present. The States of Maharashtra and Gujarat are industrial hubs; the tourism potential of Rajasthan, Goa and the Union Territories of Dadar & Nagar Haveli and Daman & Diu is well known; Madhya Pradesh and Chattisgarh have impressive agriculture and forest resources. I see the State Governments and the bankers working in close coordination to tap the potential of each State/Union Territory and promoting credit flow into various growth areas.
I would like to outline some of the broad features of credit growth & development in your States.
In the area of Micro and Small Enterprises’ Credit, whereas the States of Rajasthan and Gujarat have shown more than 50% growth in credit flow, other States have reflected lower credit growth. Similarly, though efforts are being made to improve the credit flow to housing, weaker sections, minority community and education loans, the credit growth in these sectors need closer monitoring in the State Level Bankers Committees. In fact, in States where the State Chief Ministers themselves chair the quarterly SLBC meetings, the performance of the banking sector has been seen to be very impressive.
With regard to the Credit Deposit Ratio, I find that except for Maharashtra, Rajasthan and Gujarat, all other States in Central and Western Region have a lower CD Ratio than the benchmark of 60%. I request the Chief Ministers to use the forum of SLBC meetings to actively coordinate to see that the CD Ratio in their States is improved.
In the States represented here today I found that there are 15504 habitations with population above 2000 that do not have banking facilities. I had outlined a target in my last budget speech covering such habitations by the year 2012 with banking facility. The Financial Inclusion Plans for coverage of all habitations with banking facilities must be closely monitored by the State Chief Ministers and CEOs of all Public Sector Banks. There is also need to ensure that financial literacy and financial inclusion is integrated with the technological development of banking infrastructure in rural and semi-urban areas. I would particularly ask the five SLBC convenor banks of this region, namely Bank of Maharashtra, Dena Bank, State Bank of India, Central Bank of India and Bank of Baroda to be particularly proactive in this area.
The target of agriculture credit flow is also on our agenda today. This is a critical item for review in the SLBCs, as well. For the current financial year, the target for agriculture credit flow has been fixed at Rs 3,75,000 crores. I find that all the States of this region have increased agriculture credit flow by over 25% during the last year, which I consider to be very good. Further, for the year 2010-11, Government has increased additional interest subvention from 1% to 2% for the prompt paying farmers availing short term loans under the interest subvention scheme. This would imply that a farmer who repays his loans promptly would need to pay only 5% as rate of interest as the banks sanction such loans at 7% interest.
I have noticed that as far as credit to agriculture is concerned, the States of Maharashtra and Chhattisgarh have shown remarkable growth. However, the States of Madhya Pradesh, Rajasthan, Gujarat and Goa need to accelerate their agricultural growth momentum. Housing loans have grown over 25% in all States except Goa. Education loans have shown good growth with 14% growth in number of accounts and 25% growth in amount.
The review of progress of Centrally Sponsored Schemes in the States is another agenda item on which I request assessment from the States. Further, this region, particularly States of Maharashtra & Gujarat, is known for its vibrant cooperative sector. All States in the region have signed the MOU with the Central Government to implement reforms in the Short Term Credit Cooperative Sector (STCCS) except Goa. I expect full implementation of the STCCS Package and request Government of Goa to sign the MOU with GoI and NABARD at the earliest so that recapitalization assistance is released by the Government.
We will also discuss the implementation of Aam Admi Bima Yojana and Co-contributory Pension Scheme ‘Swavalamban’, these being important priorities before the Government. In my meeting with the CEOs of the Public Sector Banks later in the day today, I shall take forward the discussions of our meeting, including issues relating to infrastructure financing.
India’s financial sector is growing today at a fast pace. It provides growth opportunities unparalleled and unmatched by the mature financial markets around the world. I take this opportunity to advise the Banks to convert savings from semi-urban and rural markets into financial assets through effective financial inclusion. With the improvement in banking technology, financial inclusion initiatives will strengthen financial deepening. I appreciate Reserve Bank of India’s efforts at financial inclusion and enhancing financial literacy.
I once again thank all of you for your presence today in the meeting. We will now have a short presentation of the issues for today’s meeting.”
FM Calls for Integration of Financial Literacy and Financial Inclusion with the Technological Development of Banking Infrastructure in Rural and Semi-Urban areas
Union Finance Minister Shri Pranab Mukherjee has asked the state governments and bankers to position themselves to finance the emerging demand for credit from different sectors including agriculture, manufacturing and services sectors in their respective regions. He further asked them to make serious efforts to improve the credit flow to housing, weaker sections, minority communities and education loans and closely monitor them through state level bankers committees. The Finance Minister was addressing the Joint Meeting of the Chief Ministers of Central and West Zone States and CEOs /CMDs of public sector banks and Financial Institutions in Mumbai today.
The meeting was attended by the Chief Ministers of Maharashtra, Rajasthan, Madhya Pradesh, Goa and Finance Ministers of Chhattisgarh and Administrator of Union Territory of Dadar and Nagar Haveli, Daman & Diu and Principal Secretary, Finance of Gujarat State. The meeting was also attended by representatives of RBI and NABARD.
The Finance Minister said that there is a need to ensure that financial literacy and financial inclusion is integrated with the technological development of banking infrastructure in rural and semi –urban areas. He advised the banks to convert savings from semi-urban and rural markets into financial assets through effective financial inclusion. He also stressed on effective implementation of Aam Admi Bima Yojna and Co-contributory Pension Scheme ‘Swavalamban’ as these are important priorities before the government.
This was the second such meeting held with the Chief Ministers and the bankers by the Finance Minister outside Delhi. The first meeting was held on 14th June, 2010 in Patna with the Chief Ministers of East and North-Eastern States and Bankers. The Finance Minister said that the next meeting will be held with the Chief Ministers of Northern Zone and Bankers in Chandigarh early next month.
The complete speech of the Finance Minister made in the meeting in Mumbai today is given below:
“Hon’ble Chief Ministers, Minister of State for Finance Shri Namo Narain Meena, CMDs of Public Sector Banks and representatives of Central and State Governments, RBI, NABARD. First of all, I extend my heartiest welcome to all of you present here today for attending this meeting. It is significant that we are holding the meeting at Mumbai, the financial capital of India. However, we are aware that for long, the financial sector had ignored the needs of the poor, the marginalized, the small farmer, the micro entrepreneur and others like them who exist not very far and also within the city. I have carefully chosen the agenda items today to focus attention on issues affecting such classes of people. You will agree that there is urgent need for including people from all strata in the mainstream banking system and for putting our country firmly on the path of overall growth and development.
A similar meeting was convened recently for the Eastern Zone States in Patna. The focus on delivery of credit to the poor was of primary concern there. We could discuss area specific issues and fix time-lines for improvement there. We hope to achieve a similar objective today, as well, and expect your active participation in the process.
At the outset, I would urge the State Governments and Bankers to position themselves to finance the emerging demand for credit from all sectors in this region, whether from agriculture, manufacturing or services. We have here today an interesting variety of States present. The States of Maharashtra and Gujarat are industrial hubs; the tourism potential of Rajasthan, Goa and the Union Territories of Dadar & Nagar Haveli and Daman & Diu is well known; Madhya Pradesh and Chattisgarh have impressive agriculture and forest resources. I see the State Governments and the bankers working in close coordination to tap the potential of each State/Union Territory and promoting credit flow into various growth areas.
I would like to outline some of the broad features of credit growth & development in your States.
In the area of Micro and Small Enterprises’ Credit, whereas the States of Rajasthan and Gujarat have shown more than 50% growth in credit flow, other States have reflected lower credit growth. Similarly, though efforts are being made to improve the credit flow to housing, weaker sections, minority community and education loans, the credit growth in these sectors need closer monitoring in the State Level Bankers Committees. In fact, in States where the State Chief Ministers themselves chair the quarterly SLBC meetings, the performance of the banking sector has been seen to be very impressive.
With regard to the Credit Deposit Ratio, I find that except for Maharashtra, Rajasthan and Gujarat, all other States in Central and Western Region have a lower CD Ratio than the benchmark of 60%. I request the Chief Ministers to use the forum of SLBC meetings to actively coordinate to see that the CD Ratio in their States is improved.
In the States represented here today I found that there are 15504 habitations with population above 2000 that do not have banking facilities. I had outlined a target in my last budget speech covering such habitations by the year 2012 with banking facility. The Financial Inclusion Plans for coverage of all habitations with banking facilities must be closely monitored by the State Chief Ministers and CEOs of all Public Sector Banks. There is also need to ensure that financial literacy and financial inclusion is integrated with the technological development of banking infrastructure in rural and semi-urban areas. I would particularly ask the five SLBC convenor banks of this region, namely Bank of Maharashtra, Dena Bank, State Bank of India, Central Bank of India and Bank of Baroda to be particularly proactive in this area.
The target of agriculture credit flow is also on our agenda today. This is a critical item for review in the SLBCs, as well. For the current financial year, the target for agriculture credit flow has been fixed at Rs 3,75,000 crores. I find that all the States of this region have increased agriculture credit flow by over 25% during the last year, which I consider to be very good. Further, for the year 2010-11, Government has increased additional interest subvention from 1% to 2% for the prompt paying farmers availing short term loans under the interest subvention scheme. This would imply that a farmer who repays his loans promptly would need to pay only 5% as rate of interest as the banks sanction such loans at 7% interest.
I have noticed that as far as credit to agriculture is concerned, the States of Maharashtra and Chhattisgarh have shown remarkable growth. However, the States of Madhya Pradesh, Rajasthan, Gujarat and Goa need to accelerate their agricultural growth momentum. Housing loans have grown over 25% in all States except Goa. Education loans have shown good growth with 14% growth in number of accounts and 25% growth in amount.
The review of progress of Centrally Sponsored Schemes in the States is another agenda item on which I request assessment from the States. Further, this region, particularly States of Maharashtra & Gujarat, is known for its vibrant cooperative sector. All States in the region have signed the MOU with the Central Government to implement reforms in the Short Term Credit Cooperative Sector (STCCS) except Goa. I expect full implementation of the STCCS Package and request Government of Goa to sign the MOU with GoI and NABARD at the earliest so that recapitalization assistance is released by the Government.
We will also discuss the implementation of Aam Admi Bima Yojana and Co-contributory Pension Scheme ‘Swavalamban’, these being important priorities before the Government. In my meeting with the CEOs of the Public Sector Banks later in the day today, I shall take forward the discussions of our meeting, including issues relating to infrastructure financing.
India’s financial sector is growing today at a fast pace. It provides growth opportunities unparalleled and unmatched by the mature financial markets around the world. I take this opportunity to advise the Banks to convert savings from semi-urban and rural markets into financial assets through effective financial inclusion. With the improvement in banking technology, financial inclusion initiatives will strengthen financial deepening. I appreciate Reserve Bank of India’s efforts at financial inclusion and enhancing financial literacy.
I once again thank all of you for your presence today in the meeting. We will now have a short presentation of the issues for today’s meeting.”
Comments