Commercial banks operating in Orissa have been chastised by the state government for their below par lending to the agricultural sector that supports over two-thirds of livelihoods in the state.
The overall agricultural advances by commercial banks stood at Rs 22,063.71 crore (as on June 30 this year), which is disproportionately low at only 30.52 per cent of the total advances (Rs 72,298.44 crore) in the same period.
“The picture is disturbing with regard to the achievement under the agriculture sector. Lending by the public sector banks to this sector is only 20 per cent of the target. Performance of a large number of public sector banks in terms of their overall performance under the Annual Credit Plan, more specifically to the agriculture sector, can hardly be reckoned as satisfactory,” state Chief Minister Naveen Patnaik said while addressing the delegates at the 124th meeting of State Level Bankers’ Committee (SLBC).
With such a huge shortfall in performance during the first quarter, how are we going to achieve our overall target in this year, he questioned.
Prafulla Chandra Ghadai, the state finance minister said, “Credit to the agriculture sector is not growing as per the state’s expectations. Only 30.52 per cent of the total advances by the commercial banks have been to the agricultural sector. For Andhra bank, the agri-lending is only 6.6 per cent of the total advances, 1.8 per cent for Bank of Baroda, 2.73 per cent for Dena Bank, 1.62 per cent for Oriental Bank of Commerce and even zero for some other public sector banks.”
The banks that have not advanced even a single rupee to the agriculture sector in the April-June quarter include State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, ING Vysya Bank, Orissa State Financial Corporation (OSFC) and Small Industries Development Bank of India (SIDBI).
Speaking on the occasion, Harun R Khan, Deputy Governor, Reserve Bank of India (RBI) said, “Credit flow to the agriculture sector has been far from satisfactory. I can see that the credit targets in this sector have not been met. Agriculture sector is definitely a priority sector as it has lot of linkages with the industry and we need to ensure that the credit flow to this sector increases and this leads to rise in productivity. A sub-committee of the SLBC needs to be formed to look into the areas of extension support for the agricultural sector.”
Raising concern over the stagnant growth in number of bank accounts of farmers, he urged upon the banks to include more and more farmers within the ambit of banking.
Lending to the agricultural sector aside, the commercial banks have also failed to live up to the expectations in other parameters like credit flow to the MSME (Micro, Small & Medium Enterprises) sector and Credit-Deposit (CD) ratio.
“The advances to the MSME sector stood at Rs 10,919 crore by June-end which represents only 15.09 per cent of the total advances by the banks. This is certainly not in tune with the steps taken by the state government to promote the sector. Besides, the CD ratio of 12 districts in the state is below the RBI stipulated norm of 60 per cent. The continuous decline in CD ratio of commercial banks remains a cause of concern for us,” said Ghadai.
Commenting on the CD ratio, the Chief Minister said, “While the overall CD ratio under the commercial banks is reported to be 63 per cent, the ratio for the public sector banks is only 57 per cent. The CD ratio of some of the strong public sector banks is below 50 per cent. If we disaggregate the CD ratio into rural and urban segments, a more disquieting picture emerges. While the overall CD ratio of rural branches of the public sector banks is only 48 per cent, the corresponding ratio for the urban branches is 72 per cent.”
