Karnataka lagging behind in lending compared with three neighbouring States

Chief Minister Siddaramaiah on Saturday said that lending by commercial banks to education and housing sectors and self-help groups (SHGs) in the State was significantly lower than in neighbouring States such as Tamil Nadu, Kerala and Andhra Pradesh and it needs to be given a boost.

At the 124th meeting of State-Level Bankers Committee (SLBC) here, Mr. Siddaramaiah said credit flow by banks in the State to the education sector was Rs. 4,263 crore, which was very low compared with Tamil Nadu (Rs. 11,894 crore), Kerala (Rs. 7,201 core) and Andhra Pradesh (Rs. 5,446 crore) during 2012-13. Number of educational loans given by banks was low compared with neighbouring States, he said.

A target had been set to disburse education loans amounting Rs. 5,116 crore by March 2014. “As human capital development is essential factor for sustainable growth, I look forward to speedy implementation of education loan schemes,” the Chief Minister said.

Reserve Bank of India regional director Uma Shankar said according to an RBI study, bankers denied education loans to students citing bad credit history of parents and difficulty in tracing students after disbursements of loans and completion of studies.

Negative growth

Chief Minister said: “I am concerned about the negative growth in the housing loan segment. The sector is vital for providing not only housing space but also employment.”

The government wants to make Karnataka a “hut-free” State, but banks have disbursed Rs. 5,771 crore against Rs. 15,000 crore in Andhra Pradesh. An average housing loan in the State was Rs. 2.7 lakh.

Lending to SHGs was also negligible and banks disbursed Rs. 5,181 crore to four lakh SHGs against disbursement of Rs. 15,000 crore to 10 lakh SHGs in Andhra Pradesh, the Chief Minister said. “I expect the banks to firm up strategies to strengthen this segment to have wide inclusion of population, covering weaker sections and women.”

Noting that five public sector banks and two private sector banks had their origins in Karnataka, he said the State had 8,430 bank branches. However, this coverage had not resulted in increased credit flow. While Tamil Nadu and Andhra Pradesh had maintained credit–deposit (CD) ratio in the range of 117 to 120 per cent, the State banks’ CD ratio was just about 75 per cent, Mr. Siddaramaiah, who also holds the Finance portfolio, said.

He suggested that a high-level committee look into the issue of low CD ratio in the State and formulate strategies to improve the credit outflow, which would stimulate economic growth. Referring to issues in the farm sector, the Chief Minister said the progress in issuing Kisan Credit Cards (KCC) was slow as only 7.98 lakh cards were issued in 2012-13 against the target of 11 lakh cards. .

The number of transactions under the electronic benefit transfer (EBT) scheme was not encouraging in seven districts. About 12 lakh beneficiaries have enrolled under it, he said. The State’s annual credit plan for 2013-14 under priority sector advances had been increased to Rs. 73,362 crore against the achievement of Rs. 60,559 crore in the previous fiscal year.

Kumar Jain, chairman of SLBC and CMD of SyndicateBank, S.V. Ranganath, Chief Secretary, G.R. Chintala, chief general manager of NABARD, Bangalore, and officials of other banks attended the meeting.

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