Orissa finance minister Prafulla Chandra Ghadai today called upon the banks operating in the state to be liberal in extending credit to the people affected by recent floods in the state.
The Reserve Bank of India (RBI) may be requested to initiate steps for restructuring and rescheduling of loan disbursed to the people affected by flood, Ghadai said. Expressing his concern over the decline in the credit-deposit (C-D ) ratio by all banks to 69.12 percent in the state by the end of September 2008 compared to 77.91 percent a year before, the finance minister said, some banks have recently come out with circulars asking the branch managers to focus on recovery of loans instead of providing fresh credit to the people.
This will be contrary to the spirit of the state government which is giving top priority to the rehabilitation of the flood affected people. There is vast scope for increasing the lending to the agriculture, small and medium enterprises and micro enterprises among others.
Speaking at the inaugural session of the State Level Bankers’ Committee (SLBC) here Ghadai said, access to finance is a pre-requisite for government’s effort to achieve financial inclusion in the state. So the banks should endeavour to increase the number of no-frills account. Beside, the financial inclusion process must be completed within the stipulated time period, Ghadai added.
Brij Mohan Mittal, executive director, UCO Bank and chairman, SLBC said, Orissa is fast on its way to become one of the industrialised states in the country with a projected investment of Rs 6 lakh crore in steel, aluminium, petro-chemicals and power sectors.
He said, most of the farmers in Orissa belong to small, marginal and landless category. So the banks should finance more and more on group basis that is either under Joint Liability Group (JLG) or Tenant Farmers Group (TFG).
Urging the banks and the line departments of the government to focus on the flow of credit to SME sector, through cluster approach as this sector draws people out of the primary sector to the secondary and the tertiary sectors, helps the state in capital formation and increase export potential thereby increasing the per capita income. The performance of the banks under annual credit plan is 59 percent by end of September which needs improvement, he added.
Chief secretary Ajit Kumar Tripathy suggested the banks should refrain from reducing the credit. Citing the instance of a bank asking its branch manager to seek approval from the regional office before sanction of loans, he warned that such action is not acceptable. Finance secretary R N Senapati and K Sudhakar, regional director, RBI spoke on the occasion.
