Chidambaram overdrive to boost rural credit

Union Finance Minister P Chidambaram, after announcing a pro-rural Budget, is making sure that this becomes a reality at the grassroots. He is making sure, on a first-hand basis, that public sector banks are carrying out his Government's target of disbursing a total of Rs 1,05,000 crore of rural credit during this fiscal.

Chidambaram visited a series of rural credit branches in South Karnataka on Saturday along with chairmen of banks such as Canara Bank, Vijaya Bank and State Bank of Mysore to ensure that credit disbursals are on track.

Speaking directly with the respective bank managers and to the community at large near each of the branches, he sought to ensure that the banks give due importance to agriculture, educational and diary loans to the rural community. He also urged the banks to encourage self-help groups and provide loans to them as well.

Later, speaking to the media, he said: "There has been a perception in the banking community that rural borrowers are not good borrowers. They have been focussing on retail, housing and personal loans in the cities and I need to state here that the rural borrower is as good a borrower as the one in the cities. Due to various factors, including the recent drought situation, the repayment from the rural community has dipped. This should not discourage bankers from lending to the rural population. I am personally advising bank chairmen to restructure such loans and issue fresh loans to those who are affected and I am sure that this community will certainly pay back."

Commenting on the progress of rural credit since the budget announcement, he said: "Things are improving. Month by month I am seeing good progress and I am sure we will reach the target of Rs 1,05,000 crore disbursals during the current fiscal."

Taking pains to explain that this is not a loan mela, he said: "This is a sincere effort to help the rural population of our country. All borrowers have to repay the amount and we are not here to distribute money."

Spiking a series of requests from farmers to reduce interest rates on the loans, he said: "If I reduce the interest rates, the public sector banks will then ask for budgetary support from the government of India. In turn, I will have to tax the citizens more. The prevailing rates of interest are proper and I urge you all to repay the loans now that the monsoon has favoured the nation. I do understand that you are all facing problems and for this I have advised the banks to extend the term of the loan so that you can repay the loan."