‘Nationalise Rural Banks To Increase Rural Credit’

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Hyderabad, June 8: Rural Bank employees have asked the Centre to ‘nationalise’ rural banks with a view to effectively increase rural credit in villages, to save farmers from the debt-trap.

“Though rural banks were promoted with an aim to support small and marginal farmers and artisans in villages, they were made to extend credit to affluent customers under the supervision of commercial banks, thus totally neglecting the poor”, S Venkateswar Reddy, secretary, All India Regional Rural Bank Employees Association indicated.

The all India credit-deposit ratio is at 42 per cent, he pointed out. Though the sponsor bank invested only 35 per cent in the Rs 1 crore equity of rural bank, it will determine the lending policy of the bank, Mr Reddy noted. “They always look to maximise profits and insists on extending credit to only those customers who can pay higher interest rate”, he added.

There are about 28 sponsored commercial banks, controlling 196 rural banks, having a business of over Rs 80,000 crore. “All the rural banks are running in profits, but all are not supporting farmers problems,” Mr Reddy lamented.

While an urban customer of a commercial bank gets a car loan for seven-nine per cent interest, the farmer has to pay 11-12 per cent or more in some cases towards tractor loan. This kind of anomaly can be removed only when the government takes over rural banks and fixes responsibility on them, he noted.