The Telegraph
Since 1st March, 1999
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Deposit rise good for growth, says FM

Sivaganga (TN), March 17: The growth in deposits of small rural branches of scheduled commercial banks augurs well for the country’s savings rate and is proof of enhanced income in the hands of the people, finance minister P. Chidambaram said today.

This is a direct fallout of the high 8.5 per cent average GDP growth for the last three years, which has helped nationalised banks step up their credit to farmers and other sectors, Chidambaram said.

Chidambaram today launched a unique three-in-one package of the Indian Bank’s Kaliyarkovil branch, which is the 1,000th branch to be part of the computerised core banking service (CBS) network, besides launching India’s first biometric ATM in this small village.

The finance minister also launched the bank’s financial inclusion (credit to all) scheme by offering everyone a no-frills account with just Rs 5. The biometric ATM does not require a card to operate, only a thumb impression of the customers will suffice.

Chidambaram was amazed that the Indian Bank’s Kaliyarkovil branch alone boasted of a Rs 24-crore deposit, of which Rs 7 crore was lent, including Rs 3.5 crore as farm credit.

These deposit figures show there is more money in circulation among the people due to the rapid GDP growth in the last three years, he said.

This situation should give nationalised banks a breather to lend more to the priority sector, including under the 4 per cent differential rate of interest scheme.

Chidambaram called upon women’s self help groups (SHGs), in particular, to seek more credit and start new small enterprises as both the UPA chairperson Sonia Gandhi and Prime Minister Manmohan Singh were keen to increase credit for women SHGs in a big way.

“Banks are now lending to 26 lakh women SHGs’ across India but the UPA regime wants this to go up to 1 crore,’ he added.

The government wants every eligible citizen of India to have a bank account holder, Chidambaram said. The no frills savings account was indeed the gateway to more savings, credit, generation of income and repayment of credit by customers. This should become a virtuous cycle, he added.

On inflation

Chidambaram was confident that the recent steps taken by the government and the Reserve Bank to rein in inflation will yield results in the near future.

The small ups and downs in the inflation rate should be no big cause for worry, he said.

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