Nirmala Sitharaman has asked rural banks to scale up the disbursement of credit to meet the rising demand of agriculture and allied sector
NEW DELHI — Union Finance Minister Nirmala Sitharaman has asked rural banks to scale up the disbursement of credit to meet the rising demand of the agriculture and allied sector, according to a Finance Ministry statement issued on Friday.
Chairing a meeting to review the business performance of the Karnataka Grameena Bank (KaGB) at Ballari on Thursday, the Finance Minister assessed key indicators including credit growth, NPAs, performance under financial inclusion and implementation of government-sponsored schemes.
FM Sitharaman also directed all stakeholders to take necessary steps to realise the potential of allied agriculture activities in the region. KaGB and Canara Bank were specially directed to work with state government departments to increase credit disbursement to MSME and allied sectors.
The rationalisation of GST rates has opened new opportunities in rural areas due to an increase in consumption, which is an indication of more funding by banks, the Finance Minister said. She urged the rural banks to leverage this opportunity to cater for the credit requirements in semi-urban and rural areas.
The Union Minister said that the capital requirements of some of the FPOs are met by Development Financial Institutions and Government Departments. The working capital requirements should be fulfilled by the Banks. Rural banks should upgrade their products and services as per the convenience and demand of Farmer-Producer Organisations, the Minister emphasised. This will enable both Banks and FPOs to leverage their resources for mutual benefit and sustainable growth of the rural economy.
She further stated that many companies are moving their services, like data centre services, from tier-1 to tier 2 and 3 cities. The rural banks should focus on such emerging areas to improve their financial health. KaGB should focus on its business operations to make the bank profitable and overcome the challenges faced by stressed assets, the minister added.
The Union Minister advised KaGB and Sponsor Bank to engage with respective committees at the panchayat level to improve the screening process of applications received under Government-sponsored schemes such as PM-Vishwakarma and PMFME.
The Union Finance Minister urged KaGB to spread its presence in the Kalyan Karnataka region by opening new branches wherever the presence of banking outlets is inadequate. KaGB was also advised to enhance operational efficiency by improving asset quality, adopting new technology and strengthening customer service delivery.
The Secretary, DFS, M Nagaraju, highlighted that the integration of systems and processes has been completed post-amalgamation and stressed KaGB's medium-term business plan and review thereof by the sponsor bank for long-term sustainability and viability of the rural bank.
Nagaraju noted the potential in agro processing and MSME in the region and urged KaGB to partner with NABARD for value creation by farmers in agriculture and allied sectors.
He appreciated KaGB for its remarkable progress in Atal Pension Yojana and suggested improving its performance under other financial inclusion schemes such as PMJJBY, PMSBY and PMJDY. He also suggested a future roadmap to partner with public sector banks by providing banking services in unserved and underserved areas.