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Finance Minister calls for greater credit flow to backward areas

Finance Minister Yashwant Sinha today called for giving major thrust to micro credit lending, saying that commercial and cooperative banks should increasingly branch out to rural areas to benefit the common man.

Inaugurating the first branch of the Bombay-based Development Credit Bank Limited in New Delhi today, Sinha said micro banking has unfortunately not made much progress in the country.

The self-help groups, particularly those managed by women, have achieved remarkable results. There is need to replicate these experiments in other parts of the country, he said.

The finance minister expressed concern at the low credit-deposit ratio in underdeveloped parts of the country. The funds meant for those regions were going to more developed areas, accentuating the inequalities.

Stressing the need to focus credit towards the poorer states, he suggested that the bank should concentrate more on rural areas and on micro credit.

Bank chairman Naushad I Padamsee said efforts were on in this direction and the finance minister's suggestion would be taken heeded by the bank. He said 100 cooperative banks were incorporated by DCB, which is also supervising their functions.

The finance minister said he was constrained not to speak much as the budget exercise is on and he had made an exception to come and attend the function.

Prof A M Khusro, chairman of the 11th Finance Commission, outlined the role of the bank in the years to come. Khusro was the chief guest at the function in his capacity as the head of the Delhi chapter of the Aga Khan Foundation. The Aga Khan Development Network, in particular the Aga Khan Fund for Economic Development, is the bank's largest shareholder.

This is the 42nd branch of the bank and the first in the northern India. The management has set the target of Rs 500 million deposits till March 30 for the branch. The branch has already received Rs 250 million of deposits on the first day of its opening, Padamsee said.

Overall, the bank has fixed the goal of deposits totalling Rs 20 billion this fiscal. The bank has already got Rs 17.5 billion of deposits so far. On credit front, the bank is targetting Rs 11 billion this fiscal.

On the occasion, Sinha was presented with muqrana, a sculpture by Peter Yenwine of the United States, which was commissioned by the bank. The entire sculpture is structured upon the single point of contact between the rock-solid foundation, the client and precision performance crystal glass, the bank.

UNI

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