The Karnataka government today asked the Reserve Bank of India (RBI) to initiate steps to increase Credit Deposit Ratio (CDR) to the cooperative credit institutions in the state, which has come down by five per cent in the past two years. CDR is the proportion of loan-assets created by banks from the deposits received.
Karnataka chief minister and finance minister B S Yeddyurappa during his meeting with RBI governor D Subbarao here asked him to step up the credit flow to agriculture sector by allowing higher refinance by NABARD to cooperative bodies from current level of 40 per cent to 50 per cent.
Describing the meeting with RBI governor as “cordial and fruitful”, Yeddyurappa told reporters here that he has also demanded that interest rate on loans extended for micro and small industries be brought down to 10 per cent from the existing 13 per cent to help these sectors which have been hit by the economic slowdown.
The chief minister also pointed out to Subbarao that advances to the agriculture sector and weaker sections have also declined by one to two per cent out of the total advances.
He said he has asked the RBI to simplify guidelines for educational loans by urging the banks not to insist for surety for loans to be availed by students from middle class, SCs and STs. Subbarao appreciated the prudent financial management and fiscal discipline achieved by Karnataka, he said.
