 "Nirmala Sitharaman reviews KaGB, focuses on FPO and MSME lending")
Union Finance Minister Nirmala Sitharaman has said that increased consumption in rural areas due to rationalised goods and services tax (GST) rates signals new opportunities for banks to enhance credit support in semi-urban and rural regions.
Sitharaman urged regional rural banks to leverage these developments for inclusive growth.
The Union minister chaired a review meeting on the business performance of Karnataka Grameena Bank (KaGB) in Ballari on October 16.
The meeting was attended by M Nagaraju, Secretary, Department of Financial Services (DFS), Shaji KV, Chairman, Nabard; the Executive Director of Canara Bank; and other senior officials from the ministry of finance.
During the review, the minister assessed KaGB’s key performance indicators including credit growth, non-performing assets (NPAs), progress under financial inclusion, and the implementation of government-sponsored schemes.
She advised the bank to expand its share in ground-level agricultural credit disbursement, with a special focus on emerging sectors of the rural economy.
Sitharaman emphasised the need to tap the potential of allied agricultural activities and directed KaGB and its sponsor bank, Canara Bank, to collaborate with state departments to boost credit flow to MSMEs and allied sectors.
The finance minister also stressed that while capital needs of Farmer Producer Organisations (FPOs) are often met by development institutions and government departments, their working capital requirements should be supported by banks.
“Rural banks must upgrade their products and services as per the needs of FPOs to enable sustainable growth of the rural economy,” she said.
Sitharaman further noted that several companies are shifting services such as data centres from Tier-I to Tier-II and Tier-III cities, and urged rural banks to tap into such emerging opportunities.
She advised KaGB to strengthen its business operations, improve profitability, and address stressed assets.
Nagaraju, meanwhile, said KaGB had completed its system integration process following amalgamation. He underscored the importance of a medium-term business plan for long-term sustainability and viability.
Nagaraju highlighted the potential for agro-processing and MSME growth in the region and urged KaGB to partner with NABARD to enhance value creation for farmers. He lauded KaGB’s strong performance in the Atal Pension Yojana (APY) and encouraged improvement in other financial inclusion schemes such as PMJJBY, PMSBY, and PMJDY. Nagaraju also stressed the importance of staff integration and skill upgradation in the post-amalgamation phase.