Translating financial inclusion into a meaningful initiative for revolutionising the economic activities in the unbanked areas in the state of Jammu and Kashmir, the banking community in J&K should expand branch network and open physical branches. At least 25% of these branches should be in villages having population less than 10000 population. They should train business correspondents and also lay emphasis on self - help group (SHG) formulation and link them to banks.
This was stated by the Reserve Bank of India Governor, Dr. D. Subarao while presiding special meeting of J&K State Level Bankers’ (SLBC) Committee meeting here today. The Governor while scanning the performance of banks operating in the state said, J&K Bank is leader of performance in the state. He also appreciated the bank for announcing a full fledged branch at Surara village in district Samba where the Governor had personally visited yesterday to preside over a financial inclusion programme.
The meeting was attended Chief Secretary, Madav Lal, Principal Secretary Finanace, Mohammad Iqbal Khanday, Commissioner/Secretary Information Technology, M. K. Diwedi, Commissioner/Secretary Agriculture Production Department, Shaleen Kabra, director, Department of Financial Services, GoI, Ministry of Finance, Sanjeev Jindal, Regional Director (for J&K) RBI, K. K. Saraf, Chief General Manager NABARD, S. C. Rabra and other senior officers of banks, RBI and government.
It was a historic moment for the banking community here that for the first time RBI Governor addressed the bankers in the SLBC meeting. While deliberating upon various issues related to the banking and financial services in the state, he asked the banks to improve credit-deposit ratio (CDR).
“The credit-deposit ratio, which was 35% as at the end of December 2011, indicates unsatisfactory performance of banks. This is less than the half of the national average CDR of 75%,” the Governor said.
After a thorough interaction with the banks, he set a target of 5% increase in CDR for the banks during the next financial year 2012-13. He advised banks to generate demand for credit in the state. The Governor identified agriculture as one of the potential sectors where banks can pump money.
In order to have planned credit dispensation to the agriculture sector, Dr. Subarao advised the banks to identify six districts, 3 each in Kashmir and Jammu divisions, having huge potential for agriculture activities and ensure complete credit dispensation to the sector as envisaged in the given targets.
Earlier, J&K Bank Chairman and Chief Executive Officer, Mushtaq Ahmad, in his welcome address assured the RBI Governor that the financial inclusion programme as set in motion by the apex bank would be carried out meaningfully as a mission. The chairman while presenting the progress report in this regard stated: “Out of 795 identified unbanked villages having population over 2000, we have covered 695 villages under the financial inclusion programme at the end of February 2012 and by the end of this month, there will be no unbaked village in the state.”
The chairman said, “J&K Bank is implementing financial inclusion plan for providing basic banking services in 535 SLBC identified / allotted villages having population of more than 2000 by 31.03.2012 and in another 725 unbanked villages to be covered under self-set target by 31.03.2013. J&K Bank is implementing financial inclusion plan through a mix of Brick & Mortar and Business Correspondent Model.”
Notably,14 model Villages adopted by RBI for 100% financial inclusion under Platinum Jubilee Celebration in the State have been allocated to J&K Bank under the outreach programme. Out of 14 villages adopted by Reserve Bank of India in J&K State, outreach programme has been already implemented in 13 identified villages. 13 sites under Business Correspondent Model through Common Service Centres are already functional. 3600 Smart Cards enabling delivery of ICT enabled financial services have been issued to the identified adult population in these 13 villages.
While giving details of the credit dispensation of all banks in the state as at the end of December 2011, Mushtaq Ahmad said, “The loan book of banks is Rs.18,000 crore which includes priority sector advances of Rs.11,800 crore. J&K Bank is the major contributor with Rs.12100 crore, which is 67% of the total credit. The bank is also major contributor to the priority sector advances with an exposure of Rs.8,000 crore, which is again 67% of the total chievement of all banks. All other banks, including20 nationalised banks, 3 new generation private banks, 2 regional and 8 cooperative banks have together an exposure of just Rs.5,900 crore.”
The SLBC figures reveal that SBI has contributed just Rs.1176 crore (9.95%) and PNB just Rs.611 crore (5.17%) of the total credit under priority sector. SBI’s support to the agriculture has been just 5% and that of PNB just 7%. In Micro and Small Enterprises (MSEs) sector, these banks have contributed just 15% and 5% respectively. Outstanding credit figures in education and weaker sections of society at the end of the above mentioned period also reflect their dismal performance. SBI’s contribution has been just 25% to education and 14% to weaker sections, while as PNB shares just 13% in education and 3% in credit to weaker sections.
“J&K Bank is the major contributor to all priority sectors with 68% to agriculture, 48% to education and 74% to weaker sections. In housing sector, J&K Bank has contributed 88% of the total credit by all banks. Here SBI and PNB have contributed just 2% and 3% respectively, said Mushtaq Ahmad.
The state chief secretary, Madav Lal, in his address asked the banks and other agencies to ensure speedy issuance of kissan credit cards to all farmers. He said, “Senior level functionaries of the government and bank should formulate a policy so that the 100 per cent coverage of farming community under kissan credit card up to an amount of Rs.1 lakh is ensured.”
He advised banks to extend hassle free credit to the agriculture sector, as according to him, there is a huge gap in the supply and demand of credit in this sector. He also asked the banks to extend collateral free loans up to Rs.10 lakhs to the MSMEs. He laid emphasis on achieving target under Kissan Credit Cards.