Finance Minister, Pranab Mukherjee has asked CEOs of north based banks to increase lending to sectors like agriculture, micro and small enterprises that generate employment.
He said that government is providing interest subvention of one percent on all housing loans amounting to Rs. 10 lakh and suggested the banks to pay attention to these home loan borrowers. He stressed the importance of extending these loans to rural population to meet their housing requirements.
Mukherjee said that the growth rate of loans to this sector has been 13 percent for the last six months and needed to be improved to a target of 20 percent on year-on-year basis. He praised state-owned banks in their work amidst global crisis and also said that the banks had done a lot in the area of education loans to poor. The state governments are also helping poor in education loans. For instance, there was a revision in eligibility criteria for education loans for the students of Virudhnagar district. According to the revised norms, the students who could not clear the plus two exams in their first attempts are also eligible for education loans.
He hoped that the public sector banks would continue such efforts and open more ‘no-frill accounts', provide ‘Kisan' credit cards to all farmers, make credit available for Self help groups (SHGs) and make the NREGA (National Rural Employment Guarantee Act) accounts in rural branches operational for credit offtake also. The debt swap scheme of these banks would help end the villagers' reliance on informal and exploitative sources of credit, he said.
Finance secretary said that the governments' market borrowings would not go beyond Rs. 5.5 lakh crore. The Centre's borrowing would be around Rs.4.5 lakh crore. He pointed out that two states expresses desire to increase the ceiling.