Finance Minister Pranab Mukherjee on Wednesday asked public sector banks (PSBs) to hike their lending to employment-generating sectors such as agriculture and small and medium enterprises (SMEs) in the second half of this fiscal to take advantage of the higher demand for funds during the busy season and meet the targets of priority sector lending.
At a meeting with chief executives of north-based PSBs, Mr. Mukherjee also asked the banks to address the needs of borrowers of housing loans up to Rs 10 lakh and hoped that lending to minorities would rise to the targeted 15 per cent of their lending by the end of the current fiscal.
“Taking advantage of the upcoming busy season, banks should gear up to enhance credit flow to the employment generating sectors, especially agriculture and the micro and small enterprises,” he said. The government, he said, had provided an extra one percentage point subvention on interest to those farmers who repay in time and advised banks to reap the benefits of the scheme and improve repayments.
Highlighting the PSBs’ role in achieving the target of inclusive growth, Mr. Mukherjee urged them to rapidly scale up efforts to reach banking to the inaccessible regions of the country through alternative methods and technological means. He hoped that the north-based PSBs would continue to make concerted efforts to open more ‘no-frill accounts’, provide ‘Kisan’ credit cards to all farmers, link all existing self-help groups (SHGs) to bank credit and make the NREGA (National Rural Employment Guarantee Act) accounts in rural branches operational for credit offtake also. The debt swap scheme of these banks would help end the villagers’ reliance on informal and exploitative sources of credit, he said.
As for the farm sector, he said the government was also providing an interest subsidy of one per cent on all individual housing loans up to Rs 10 lakh for dwelling units costing up to Rs 20 lakh and advised banks to pay the attention that is due to such borrowers. Such loans, he said, should be targeted to the rural areas so as to meet the housing needs of that segment of the population.
The Finance Minister pointed out that the growth rate of advances to micro and small enterprises has been close to 13 per cent during the last six months and efforts should be made to increase lending in view of the target of 20 per cent year-on-year growth. He also advised the banks to give special attention to rural areas and girl students while extending education loans.