Siddaramaiah urges banks to up credit flow

Chief Minister Siddaramaiah at the weekend urged public sector and scheduled banks to increase credit facilities to agriculture and other social sectors to stimulate growth and expand financial inclusion.

"I have announced a number of support schemes and measure for welfare of the weaker sections and it is my expectation that the banks will play a complementary role in wider coverage of these schemes. I hope that SLBC will deliberate on how this can be achieved," he said.

Addressing the 124th state-level bankers' committee (SLBC), he said, though Karnataka pioneered five state-run banks and two private banks and has 8,430 bank branches, including 3,295 in rural areas, their credit flow has not increased much. "It is evident from the credit-deposit (CD) ratio at 75 per cent in the state, as against 117 per cent in Tamil Nadu and 120 per cent in Andhra Pradesh," Siddaramaiah said.

Noting that even in rural areas, the CD ratio across the state was at 100 per cent as against 132 per cent in Tamil Nadu and a whopping 173 per cent in Andhra Pradesh, the chief minister said the trend had to be changed to ensure higher credit to priority sectors for the socio-economic development of the people.

"I also notice that ratios for primary sector advances, agricultural advances and SC/ST advances to the total advances have declined or stagnated. It is not clear why banks in the state have been so conservative in lending, which resulted in negative growth or under-achievement," Siddaramaiah said.

Appreciating the relief extended by banks during the drought last year by converting crop loans (Rs 1,555.68 crore) to term loans and re-phasing of term loans amounting to Rs 900.58 crore, he called upon banks to keep alive the production credit.

However, as persistently adverse weather has affected the agriculture sector, the effort to support agriculture should continue.

Acceding to the request of the banks, the Government of Karnataka has enhanced the maximum limit of crop loans provided to the farmers by public sector commercial banks and RRBs at 3 per cent from the existing Rs 50,000 to Rs 1,00,000, he said.

"I find that the interest subsidy claims have been settled only to the tune of Rs 31.95 crore by the Department of Agriculture till date. Banks should be pro-active in the scheme in all areas so that maximum farmers get its benefit," the chief minister added.

Pointing out that credit flow to education sector across the state at Rs 263 crore was far lower than Rs 11,894 crore in Tamil Nadu, Rs 7,210 crore in Kerala and Rs 5,446 crore in Andhra Pradesh, Siddaramaiah said, as human capital development was essential for sustainable growth, education loan schemes should be extended to rural to enhance skill development.

"Negative growth even in housing loans is matter of concern as the sector is vital for providing shelter and generating employment. As our endeavour is to make Karnataka a 'Hut Free State' this decade, banks should partner the government to provide housing for all," Siddaramaiah asserted.

The chief minister lauded Nabard (National Bank for Agriculture and Rural Development) for pledging credit support of Rs 10,000 crore for farm and rural development in the state and Rs 40 crore for improving income of farmers, artisans and tribals through promotional activities.

Though advances to micro, small and medium entrepreneurs (MSME) showed increase in volumes, the chief minister said micro enterprises have not been benefited.

"We propose to launch the Rajiv Gandhi Chaitanya Yojane to provide skill training, self-employment and placement opportunities to 200,000 unemployed youth in the state. I urge banks to support the trained youth with loans for entrepreneurship development," Siddaramaiah added.