Pranab to review credit flow to east zone states today

Union finance minister Pranab Mukherjee will meet chief ministers of east zone states, including West Bengal and Orissa, in Kolkata tomorrow to discuss state-wise flow of credit to farming, small and micro units. He will also take stock of work on financial inclusion, progress on centrally sponsored schemes, performance of regional rural banksand credit to infrastructure projects in the zone, senior public sector bank official said.

The meeting will be attended by heads of Kolkata-based public sector banks, financial institutions, as well as senior bank and state government officials. The review is happening in the backdrop of slowdown in the economy.

The pace of economic expansion declined to 6.9 per cent for the second quarter ended September, from 7.7 per cent in quarter ended June 2011.

Annual credit growth has also dipped to 17.7 per cent till November 18 from 22.8 per cent a year ago. Besides, reviewing credit flow, performance of Kolkata-headquartered banks in the region would be discussed at the meeting.

Allahabad Bank, United Bank of India and UCO bank are three public sector banks based in Kolkata.

Along with moderation in credit growth credit, banks are facing risk of rise in defaults. The sharp rise input costs, lending rates as well as demand slowdown have put severe strain on debt repayment households and small and micro units.

Non-performing assets of banks may also be focus of performance review. United Bank of India has seen a sharp rise in gross NPA from Rs 1,355 at the end of FY11 to Rs 1,908 crore at the end of September. Allahabad Bank has seen a marginal rise at Rs 1,751 crore (1.77 per cent) at September end from Rs 1,647 crore (1.75 per cent) as on March 31, 2011.