State concerned over poor lending by banks

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State concerned over poor lending by banks

Saturday, 27 February 2021 | PNS | BHUBANESWAR

The Odisha Government has expressed serious concern over poor lending by the commercial banks in the State and asked them to go in for corrective measures as the stress is on providing more credit to the people for carrying out trade and business.

Finance Principal Secretary Ashok Kumar Meena has pointed out at a recent State Level Bankers’ Committee (SLBC) meeting that against the Annual Credit Plan (ACP) target of Rs 90,395.69 crore for 2020-21, the achievement till December 31, 2020 was only Rs 52,109.89 crore, which was 57.65% of the annual target.

The achievement of banks under the total agricultural sector till December 31, 2020 was Rs 25,004.92 crore against the target of Rs 43,282.11 crore which is 57.77% of the annual target. Meena had to point out that the banks are not providing credit in the fisheries and diary sectors even though there are huge potentials in the two sectors. The achievement in ACP till December 31, 2020 under fishery and dairy was only at 13.91% and 16.17%, respectively, while the achievement in the MSME sector till this period was 76.85% of the annual target of Rs 43,282.11 crore. The achievement in khadi & village industries was 34.33% and in medium enterprises 55.85% which require focused attention.

Meena also said the average credit size to the Self-Help Group (SHGs) needs to be hiked. He pointed out that the RBI master circular of September 18, 2020 mandates a minimum of Rs 6 lakh based on MCP of SHG on the third linkage.

The banks were requested to adhere to the norms mandated by the RBI and the SLBC Subcommittee on rural credit in extending the first-dose loan to the SHGs.

In addition, the banks were urged to renew and enhance SHG loans in  2nd, 3rd and subsequent years as mandated in the RBI circular so that the average  loan size would increase to a minimum of 2 lakh by the end of current financial year and, subsequently, to Rs 4 lakh by 2022-23.

Concern was expressed over the poor credit-deposit (CD) ratio of 59.89% of the banks as on December 31, 2020. The CD ratio of public sector banks is 51.60% and that of private sector 83.82%. The public sector banks, particularly, were advised to increase the ratio.

It was observed that nine districts, Angul, Deogarh, Gajapati, Jagatsinghpur, Keonjhar, Malkangiri, Mayurbhanj, Puri and Sambalpur, have a CD ratio below 40%. Meena advised to form and conduct sub-committee meetings of CD ratio on an urgent basis to study the reasons and how to improve the CD ratio to achieve the benchmark of 60% as stipulated by the RBI.

All the sub-committees of SLBC should monitor the credit flow and other important issues at least once in a quarter prior to the SLBC meeting and discuss important issues in the SLBC meeting to address the issues, urged Meena.

With a view to enhancing the penetration of financial inclusion in the Aspirational Districts, the Department of Financial Services (DFS) extended a Targeted Financial Inclusion Intervention Programme (TFIIP) to all the State’s 10 Aspirational Districts.

The Collectors and Lead District Managers (LDMs) of these districts were requested to achieve 100% Key Performance Indicators (KPIs)

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