Alleviate farm distress, banks told

Haryana finance minister says banks should encourage farmers to use loans in a fruitful manner

Taking a serious note of problems pertaining to credit faced by farmers, Haryana Finance Minister Chaudhary Birender Singh said the situation reflected inefficiency on the part of bankers if farmers committed suicide because they failed to repay loans to private moneylenders.

He was addressing the 96th State-Level Bankers' Committee Meeting of Haryana.

He said the norm of priority sector lending became fruitful only when the communication and financial support from the banks to farmers was transparent.

He said banks could play a crucial role in motivating farmers to utilise their loans in the most fruitful manner.

Haryana is on a high growth trajectory, according to him. There was a plethora of investment proposals and 28 special economic zones were in the pipeline, he said. In 10 years, about one-third of the land in Haryana would be under industrialisation, especially the NCR (National Capital Region), he added. Banks could play a vital role by giving back-end support for the industrialisation of the state, he said.

He proposed the banks waive the loans of cooperatives in the state as has been done in the states of Punjab and Tamil Nadu.

He said the banks in Haryana did a commendable job during the bird flu scare. He observed that the banks should design ways and means to slash the rate of interest for the deserving people.

S C Gupta, Chairman & Managing Director, Punjab National Bank, and chairperson of the meeting, said agriculture continued to occupy a significant position in the state's economy. The main thrust of the government of India is on doubling credit to the agriculture sector during the three-year period ending March 31, 2007, through disbursement at the rate of 30% p.a. Gupta expressed happiness that bankers in the state of Haryana are playing on pro-active role and putting in all possible efforts to boost credit flow to Agriculture Sector. Thrust has already been laid on promoting Horticulture and Organic Inputs. The National Horticulture Board, Agriculture Department and Animal Husbandry Department as well as NABARD, all are playing an important role on this count.

Gupta advised to the bankers to popularise KCC (Kissan Credit Card) Scheme further so that no eligible farmer is left without the card. He also urged the bankers to promote Agri-clinics/Agri-business centres, horticulture and venture capital projects with help of NHB, NABARD/NABCONS and SFAC more aggressively.

Bankers to promote Agri-clinics/Agri-business centres more aggressively and also to promote the concept of Farmers' Clubs and Kisan Goshthies with the help of important partner of banks in development i.e. NABARD and utilise these services for extending outreach of banking facilities in rustic areas of the state ensuring desired financial inclusion.

Gupta said that the amendment of the Agriculture Produce Marketing Committee Act (APMC) in Haryana would help in promoting contract farming in the state

Gupta said that the programme of linking Self-Help Groups (SHGs) with the banking system has emerged as the major micro-finance programme. In Haryana State, there has been improvement in saving linkage and credit linkage of SHGs. 9757 SHGs have been linked with bank credit as on 31.3.2006 as compared to 6633 Groups upto 31.3.2005 with tremendous growth of 60% as against the growth of 51% in the corresponding period of last year. Mr. Gupta also urged upon the bankers for more than 20% yearly growth in credit to small and medium size industries in the state and making it globally competitive. Mr. Gupta expressed with satisfaction that in Haryana advances to small and medium units/entrepreneurs are to the tune of Rs.5686 crore, which is 19% of the total advances. Annual growth to this sector as on 31.12.2006 is of 41% which is commendable.

While speaking about the performance of banks in the State of Haryana under various key-parameters of the banking during review period from March 2005 to March 2006 Mr. Gupta informed that 60 new branches of Commercial Banks and Regional Rural Banks were opened in the State during the review period, thus raising the total number of branches from 1643 to 1703. The total deposits of the Banks in the state increased from Rs.35423 crore as at March 2005 to 46584 crore as at March 2006, showing growth of 31.5% as compared to growth of 30% registered during the corresponding period of last year. Similarly, advances also increased by Rs.10448 crore from Rs.19455 crore to Rs.29903 crore during the review period, thereby showing a growth of 53.7%.

Priority Sector Advances of the State increased by Rs.5984 crore or 47% from Rs.12666 crore to Rs.18650 crore during the review period.

In Agriculture Sector, the advances increased from Rs.6175 crore as at March 2005 to Rs.8305 crore as at March 2006 during the review period, thus showing an increase of Rs.2130 crore or 34.5%.

Out of the total outstanding under agriculture advance of Rs.8305 crore direct agriculture advances outstanding are to the tune of Rs.6217 crore and Indirect agriculture advances are Rs.2089 crore.

Percentage of Direct Agriculture advances to total advances is 20.8% against RBI norms of 13.5% and percentage of Indirect Agriculture advances to total advances is 7.0% against RBI norms of 4.5%.

Advances under Weaker Sector registered a significant growth of Rs.641 crore or 32% from Rs.2004 crore to Rs.2645 crore during the review period.

Advances to Small Scale Industries in the State of Haryana increased by significant growth of 26.3% or Rs.781 crore during the review period i.e. from Rs.2965 crore as at March 2005 to Rs. 3746 crore as at March 2006 as compared to the growth of 16.6% registered during corresponding period of last year.

RBI has advised the banks to monitor CD ratio of districts below 40% more intensely. Gupta expressed happiness that no district in Haryana is having CD Ratio below 40%.