Ghadai pulls up pvt banks for non-participation in financial inclusion

The state finance minister Prafulla Chandra Ghadai has hit out at the private sector banks operating in the state for their non-participation in the Financial Inclusion Plan and failure to meet the benchmarks of the Reserve Bank of India (RBI) in their advances to the agriculture sector and weaker sections of the society.

Addressing delegates here at the 121 st meeting of the State Level Bankers' Committee (SLBC), Ghadai said, “The private banks are not participating in the Financial Inclusion Plan of the state. These private sector banks are also not participating in the government sponsored programmes like Pradhan Mantri Employment Generation Programme (PMEGP) and Swarnajayanti Gram Swarozgar Yojana (SGSY). Also, their advances to the the agriculture sector and weaker sections of the society are far below the stipulations of RBI.”

According to the data compiled by SLBC, the percentage of agriculture advances to the total advances of the private sector banks (as on September 30, 2010) stands at only 11.59 per cent. Moreover, the advances to the weaker sections by these banks have been only 2.88 per cent of their total advances.

Ghadai also stated that the CD (credit-deposit) ratio of some of the private sector banks functioning in the state is way below the RBI stipulated norm of 60 per cent. Besides, the private banks have achieved only 31 per cent of their Annual Credit Plan for 2010-11.

The CD ratio of ICICI Bank stands at 36.43 per cent, Indus Ind bank at 47.71 per cent, Rajasthan Bank Ltd at 20.82 per cent and ING Vysya Bank at 41.34 per cent.

The minister applauded the Orissa State Cooperative Bank for having achieved a CD-ratio of 101 per cent.

He also urged the banks to open more branches in the rural areas and strive towards achievement of Financial Inclusion goals.

"There are 1878 unbanked villages in the state with a population of over 2000 and all these villages need to have access to banking network by March 2011. The RBI has already sanctioned the opening of bank branches in some of the rural areas but the banks are yet to set up a branch”, he said.

Speaking on the occasion, N R Badrinarayan , executive director, UCO Bank and chairman, SLBC said, “The banks operating in Orissa have registered a growth of 22.9 per cent in deposits and 23.01 per cent in advances from September 2009 to September 2010. The CD ratio which has been on the decline has shown a marginal improvement to reach 63.78 per cent by the end of September. The advances to the SME (Small and Medium Enterprises) sector have been 12.7 per cent of the total advances.”

He expressed concern over the decline in recovery rate of banks which currently stands at 45.39 per cent, adding, “the non-recovery of loans directly slows down the credit flow by the bank.”