The government has expressed concern over the low credit-deposit ratio (CD ratio) prevailing in the north-eastern and eastern states in the country. Finance minister Pranab Mukherjee, who held meeting of chiefs of all state-owned banks in Patna, asked them to increase their CD ratio in these areas.
While the national average of CD ratio is currently at 70%, banks have a CD ratio in the range of 29-61%. in the northeast and the eastern states. Mukherjee has asked public sector banks (PSBs) to increase their kisan credit cards (KCC) in these areas by 20% in 2010-11—both in terms of the number of accounts and the amount disbursed.
Apart from Mukherjee, Namo Narain Mena, minister of state for finance and banking division, chief ministers of eastern and north-eastern states, including Nitish Kumar of Bihar and R Gopalan, secretary, financial services, ministry of finance along with the heads of Nabard and Sidbi, were also present during the meeting. The finance minister also asked the banks to increase their lending in sectors like agriculture, MSME and loans to weaker and minority sections.
Mukherjee also asked the state governments in those areas to increase the number of self-help groups and expedite the process of implementing development schemes run by the Centre to ensure economic growth. In areas where bank branches in the brick-and-mortar form is not possible, the finance minister asked the banks to increase their presence through business correspondents (BCs) to achieve financial inclusion.
Expressing their concern, bankers said connectivity is a major roadblock for them in carrying out their jobs. Other problems like lack of communication and infrastructure also act as a barrier to the proper functioning of the banking industry. Providing security to bank staff and cash were cited as other grey areas and state governments were asked to take appropriate measures in these spheres. However, in case the government provides these facilities, the banks said they are ready to increase their presence.
Some of the banks which are prominently present in these areas include State Bank of India, Allahabad Bank, United Bank of India and Uco Bank. Allahabad Bank?s CD ratio is as high as 60% in West Bengal, 50% in Jharkhand (50%) and 30% in Arunachal Pradesh.
Pranab to meet bankers
The finance minister, Pranab Mukherjee, will meet again the heads of public sector banks on June 28 in Mumbai. The FM will discuss about the the overall performance of the banks in 2009-10. Also, the FM is likely to give some kind of roadmap to the banks for the current fiscal during the meeting.