The Telegraph
Friday , March 7 , 2014
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Bengal rural credit growth in slow lane

Calcutta, March 6: Bankers are getting cautious on lending in rural Bengal for fear of non-recovery of dues.

The National Bank for Agriculture and Rural Development (Nabard) has pruned its credit growth target for the state in the priority sector for the next fiscal.

The apex refinancing agency for rural areas had set a 12 per cent growth in credit but has now slashed it to 5.28 per cent. In absolute values, the target for priority sector lending in 2014-15 is Rs 61,100.64 crore against Rs 58,034.32 crore in 2013-14.

Nabard chief general manager T.S. Raji Gain said banks had repeatedly failed to meet priority sector lending targets in the last three years.

In 2012-13, under the annual credit plan of the state, commercial banks, regional rural banks, co-operative banks and other banking institutions achieved 72 per cent of the priority sector target.

“This year, till December the credit flow achieved was 50 per cent of the target and it is likely to end up at 70-72 per cent by March,” Gain said.

Bankers blame the slow pace of growth in advances to the priority sector and in particular to agriculture on the risks associated with the recovery of loans, specially those with a ticket size of less than Rs 1 lakh.

According to data available with the State Level Bankers’ Committee, as of September 2013, commercial banks have been able to recover only 54 per cent of its total priority sector lending.

“There is a fear (of not being able to recover the advances) in the mind of the bankers because of which credit offtake is not up to its potential,” said a senior official of a PSU bank.

“Further, several banks have already become cautious while lending because of the current macroeconomic conditions,” the official said.

Bank officials said administrative co-operation was required for recovering loans, particularly in cases where there was a wilful default.

H.K. Dwivedi, principal secretary, ministry of finance of Bengal, however, blamed the banks for the situation. “Lack of recovery at times is used as an alibi for not giving more credit. You give less credit you have less recovery,”