Commercial banks operating in Orissa have been pulled up by the state government for their below-par lending to the agricultural sector. The sector accounts for the livelihood of over two-thirds of the state’s population.
Overall agricultural advances by commercial banks stood at Rs 22,063.7 crore as on June 30, or 30.52 per cent of their total advances, much lower than the total advances of Rs 72,298.44 crore in the year-ago period.
“The picture is disturbing…Lending by public sector banks to this sector is only 20 per cent of the target. The 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”, Chief Minister Naveen Patnaik said, while addressing delegates at the 124th meeting of the State Level Bankers’ Committee (SLBC). Saying the performance in the first quarter was dismal, he wondered how the state would achieve its overall target this year.
State finance minister Prafulla Chandra said, “Credit to the agriculture sector is not growing according to the state’s expectations. Only 30.5 per cent of the total advances by commercial banks have been to the agricultural sector. For Andhra Bank, 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.”
Banks that have not given 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 and the Small Industries Development Bank of India.
Harun R Khan, deputy governor, Reserve Bank of India said, “Credit flow to the agriculture sector has been far from satisfactory. I can see 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. We need to ensure the credit flow to this sector increases and leads to a rise in productivity. A sub-committee of the SLBC needs to be formed to look into areas of support for the agricultural sector.” Raising concern over the stagnant growth in the number of bank accounts of farmers, he urged banks to include more farmers within the ambit of banking.
Commercial banks have also failed to live up to expectations in credit flow to micro, small & medium enterprises (MSMEs). They have also recorded dismal credit-deposit (CD) ratios. “Advances to the MSME sector stood at Rs 10,919 crore as on June 30, only 15.1 per cent of the total advances by 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 central bank’s stipulated norm of 60 per cent. The continuous decline in CD ratios of commercial banks remains a cause of concern for us”, said Ghadai.
On CD ratios, the chief minister said, “While the overall CD ratio of commercial banks is reported to be 63 per cent, the ratio for public sector banks is only 57 per cent. The CD ratio of some 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 public sector banks is only 48 per cent, the corresponding ratio for urban branches is 72 per cent.”
