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Updated: September 17, 2010 14:51 IST

CM flags banking issues

Special Correspondent
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A file picture of Kerala Chief Minister V.S. Achuthanandan. Photo: Shiv Kumar Pushpakar
The Hindu
A file picture of Kerala Chief Minister V.S. Achuthanandan. Photo: Shiv Kumar Pushpakar

Chief Minister V.S. Achuthanandan on Friday urged the commercial banks to introspect why, despite their presence even in rural areas, private money lenders popularly known as ‘blades’ were swindling the people of the State.

Addressing a meeting of the State Level Bankers’ Committee (SLBC) here, Mr. Achuthanandan noted that Kerala had the highest bank density in the country. Only around 100 villages in the State were without a bank branch. While urging the banks to open branches in these villages also, he asked them to be more responsive than at present to the credit needs of the ordinary people.

The banks should also examine whether some of them were indirectly helping private money lenders with low interest loans that would be passed on to ordinary traders and others at a higher interest. There was also a complaint that the tough dealing ways the banks usually adopted in the case of ordinary credit seekers such as farmers, small traders and students would disappear when the big sharks approached them for credit.

He also asked the banks to examine why they were charging the farmers a higher rate of interest than the corporate institutions on loans.

He said the credit-deposit (CD) ratio of commercial banks in the State had fallen from 71.5 per cent in 2008 to 67.63 per cent in 2009. Despite the diminished flow of deposits from Keralites working abroad, the volume of deposits with the banking system was increasing in the State. There had to be a focused effort on the part of the banks to deploy as much of the funds available with them as possible for development activities in the State. They banks should devise appropriate schemes for this. And, if the banks were to do so, the governments would not have to go after foreign financial institutions for the funding requirements of even big projects.

He asked the banks to drop their tendency to behave harshly to students approaching them for education loans. There had been even instances suicides among students upon denial of bank loans. “You should ensure that such incidents do not happen again. The approach should be liberal in this case. Education loan applications should be processed promptly. The banks should put in place a system at the district level for coordinating and monitoring matters relating to education loans,” he said.

Executive Director of Canara Bank H.S. Upendra Kamath welcomed the delegates representing all banks and development departments of the government attending the meeting. State’s Chief Secretary P. Prabhakaran, Planning Secretary Teeka Ram Meena, Reserve Bank of India’s Regional Director Suma Varma and State Bank of Travancore’s Managing Director P. Pradeep Kumar addressed the meeting.






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