Form advisory committees to monitor agri credit flow

Mumbai, March 30 | Updated: Mar 31 2005, 05:30am hrs
The Reserve Bank of India (RBI) on Wednesday has asked banks to form advisory committees to monitor the flow of credit to agriculture and related activities from the banking system. This is part of the accepted recommendations of the committee set up under the chairmanship of Prof VS Vyas which had prepared a report on raising the flow of credit to the agriculture sector.

RBI wants the branch advisory committee comprising select elected representatives, including women leaders of local Panchayati Raj institutions within the branch service area, to be established at every rural branch. It should meet at least once a quarter. These meetings may be made mandatory and be attended by the controlling official of the bank. Banks may consider constituting local advisory committees for branch/group of branches comprising some users of the banks services as members.

Also banks in states where the SHG-Bank linkage programme has not shown satisfactory progress need to gear up their rural branches for facilitating bank linkages of SHGs by evolving a three-year action plan. All banks may set up adequately staffed micro-finance cells at central offices and in each state, said RBI. Banks may consider setting up micro-finance cells at their central offices.

RBI has observed that as the quality of books of accounts maintained by SHGs is an area of concern.