Reserve Bank of India Governor Duvvuri Subbarao said here on Thursday that the public finances of West Bengal are tighter than most other States in the country.
“Public finances in West Bengal has been tight, tighter that most other States. Both the State Government, Central Government and the RBI recognise it,” he told journalists after a meeting of the Central Board of Directors of the RBI.
Referring to the rate at which the State Government takes credit from the market, Dr. Subbarao said that it is 10 to 15 basis-points above the average of all the other States.
“It is an indication of the market’s assessment of public finances of West Bengal,” he said.
Dr. Subbarao who met Chief Minister Mamata Banerjee at the State Secretariat later in the day said that he raised the issue of State finances with Finance Minister Amit Mitra at the State-level Bankers Committee meeting held earlier.
The credit deposit ratio of the banks in the State, which is at 63 per cent, will be raised to 65 per cent by 2012-13 and the banks have agreed to take it to 68 per cent by 2013-14, he said.
Dr. Subbarao said that eight of the 18 districts of the State where the credit deposit ratio is below 40 per cent have been asked to increase it by five per cent. A compliance report on action taken by the district authorities in this regard will be produced to the RBI before Christmas, he said.
Stating that banks in the State are also lagging behind in extending credit to self help groups (SHGs) in the State, he said the banks have agreed to extend credit facilities to an additional 1.5 lakh SHGs other than those who have returned the loans and have good credit ratings.
West Bengal Finance Minister Amit Mitra said that out of the 11.16 lakh SHGs in the State only 9.69 lakh get credit from banks. Commenting on the meeting between Dr. Subbarao and Ms. Banerjee, Mr. Mitra said that discussions between them centred on extending more credit facilities to the SHGs and improving the credit deposit ratio of the banks in the State.