Increase credit to agricultural sector, bankers told

K.M. Shet, Executive Director, Syndicate Bank and Chairman, State-level Bankers' Conference, preparing to address the conference in Bangalore on Thursday. (From left) B.B. Mohanty, Chief General Manager, National Bank for Agriculture and Rural Develo pment; Chiranjeevi Singh, Additional Chief Secretary and Development Commissioner; and Devaki Muthu Krishnan, RBI Regional Director, are seen. — Photo: K. Gopinathan  

BANGALORE, OCT. 7. The Additional Chief Secretary and Development Commissioner, Chiranjeevi Singh, today urged commercial banks to tone up their lending operations in respect of the agricultural sector, whose needs for credit had gone up with the good monsoon this year.

Addressing bankers at the 91st State-level bankers' conference here, he said the agriculture sector demanded special importance. In tune with the Union Finance Minister's package of Rs. 1,05,000 crores to the farm sector and to double the flow of credit in the next three years, banks were required to improve their performance in providing loans to the sector.

Bank branches

The number of branches in rural areas had gone down but it had increased in the urban areas. After three years of drought, the State had recorded a good monsoon this year. The credit need of farmers would be higher than before, and this had to be fulfilled by banks.

Mr. Chiranjeevi Singh said that though the growth in the Gross Domestic Product (GDP) was 7.4 per cent during the first quarter of the year, agricultural growth was only 3.4 per cent despite the good monsoon.

Institutional lending to farmers had not gone beyond 40 per cent for the last 50 years, he said. Banks should finance all types of activities to free farmers from the clutches of moneylenders. Though there were special focus programmes, credit to women and minorities had declined from 9.22 per cent to 7.66 per cent.

Tiny sector

He said that the contribution of the tiny sector to the GDP in Delhi was more than 40 per cent, and banks could help the sector to achieve the same position in Karnataka. With the growth in population and with bank credit to the agriculture sector not keeping pace, the biggest challenge to the authorities was to ensure good lending to generate employment.

Mr. Singh said the cost of capital was falling, whereas the cost of labour was increasing. Landless labourers, hawkers, peddlers and petty traders should be financed heavily to help them take up viable projects. He was aware of the problems faced by banks in recovery of loans. But they should simplify rules and procedures and overcome the problems to ensure better credit to agriculture, he suggested.