Bank loans to minorities up, says FM

The UPA government has been impressing upon banks to lend more to minorities, and according to Finance Minister P Chidambaram, this has started showing results.

Chidambaram, speaking during Question Hour in the Rajya Sabha today, said this was evident from increase in minorities' share of priority sector advances by public sector banks from Rs 23,539 crore in March 2004 to Rs 38,402 in March 2006.

He conceded to a question that minorities had a disadvantage in terms of adequate access to credit and lending to them had not kept pace with the overall credit expansion. He, however, added that the prime minister's 15-point programme included more lending to minorities.

CPI(M) MP Brinda Karat alleged that the percentage of priority sector advances to minorities had gone down from 9.63 in March 2004 to 9.35 in March 2006. She asked if the government had asked banks to give 15 per cent credit to minorities, as mentioned in programme.

The finance minister said the programme mentioned 15 per cent targets and outlays for various schemes, wherever possible, and not 15 per cent credit.

He said the Reserve Bank of India (RBI) had advised banks to ensure adequate credit to minorities. The steps include a special cell in each bank to ensure smooth credit flow to them. The lead bank in each minority concentration district should appoint an officer to solve the problem of credit to minorities. The officer will also be responsible for publicity of schemes for minorities.

The RBI has said that such banks must tie up with NABARD and NGOs to reach the poor.

Chidambaram urged minority loan-seekers to complain to the banking ombudsman or the RBI if they faced hurdles in accessing credit.

To a question, the finance minister denied any unwillingness on the part of banks to led to students. He said there was no proposal to set up a credit guarantee fund for students. "The government has full confidence in students that they will repay the loan after getting jobs," he said.

In a separate development, the Samajwadi Party and the TDP today staged a walkout from the Rajya Sabha demanding resignation of the finance minister on the issue of non-recovery of huge tax dues from a Vedanta firm.

The demand for educational loans by students from banks had registered a huge increase. Loan accounts from this category touched 7.95 lakh in September 2006 as against 3.19 lakh in March 2004.

The number of accounts (education loan) in 17 public sector banks in rural and semi-urban areas has registered an increase from 51,337 in 2003-04 to over 1.61 lakh in 2005-06. "While there is a gap between urban and rural, it is narrowing now. I hope it will minimise further," Chidambaram said.

He said no security was required for student loans up to Rs 4 lakh. Though education loans were covered under priority sector, no specific targets for education loan disbursements were given to banks, Chidambaram said, adding that the growth in student loans was "impressive."