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MINUTES OF THE 88TH MEETING OF STATE LEVEL BANKERS' COMMITTEE,
RAJASTHAN HELD AT JAIPUR, DATE 13.03.2006

The 88th Meeting of SLBC, Rajasthan was held on 13.03.2006 at Jaipur. The meeting was graced by the presence of Hon'ble Chief Minister Smt. Vasundhara Raje, Rajasthan State, Smt. Usha Thorat, Deputy Governor, Reserve Bank of India, Sh. D.C. Samant, Chief Secretary, Government of Rajasthan, Dr. Anil K. Khandelwal, Chairman and Managing Director, Bank of Baroda, Chief General Manager, NABARD, Chairman and Managing Director of major Banks and Senior Secretaries to the Government of Rajasthan. Representative of Banks, Insurance Companies, Industrial Organisation and other developmental agencies were present on this occasion. The list of members, who attended the meeting, is annexed.

Shri Nandan Srivastava, Convenor, State Level Bankers' Committee and Zonal Head, Bank of Baroda welcomed the Hon'ble Chief Minister, Deputy Governor, RBI, CMD Bank of Baroda, CEOs of Banks, Chief Secretary & other dignitaries and participants.

He informed the house that SLBC is an august body, essentially constituted for monitoring all facets of priority sector lending and to ensure accelerated pace of development of the State economy. He said that in recent past we had focussed our attention on enhancing credit flow to agriculture and in the coming days, we would have to concentrate on credit flow to Small and Medium Enterprises (SMEs). He requested Banks to initiate necessary steps to rationalize the cost of loans to SME sector by adopting a transparent rating system with cost of credit being linked to the credit rating of enterprise.

Convenor, SLBC also informed that Banks have surpassed the social banking norms in the State and the progress under almost all the schemes is good, barring a few exceptions.

Dr. Anil Khandelwal, Chairman and Managing Director, Bank of Baroda at the outset extended a hearty welcome to Smt. Vasundhara Raje, Chief Minister of Rajasthan and Smt. Usha Thorat, Deputy Governor, Reserve Bank of India. In his welcome address Dr. Khandelwal expressed his happiness with the presence of Hon'ble Chief Minister, as well as Deputy Governor, RBI. He appreciated the proactive approach of Government officials to help Bankers for the development of the State and as such SLBC was playing quite significant role through the input of Bank finance. He further emphasized that State Government machinery & Bankers have to work together hand in glove for the development of State.

During the course of his Keynote address CMD, Bank of Baroda indicated that with deposits of nearly 50,000.00 crore, advances of Rs. 44,000.00 crores, CD Ratio of 87%, total agriculture lending of 34%, priority sector lending of 57% and weaker section financing over 10%, the Banks in Rajasthan have been able to achieve all the benchmark. He complimented the Banks in Rajasthan for having achieved substantial progress in the sanction of advances to priority sector and informed that the present meeting was being convened to deliberate upon the different issues connected with the setting up of RUDSETIs in the State. He indicated that nearly 1.40 lakh SHGs promoted in the State have been credit linked. Similarly over 37 lakh KCCs were issued by Banks to farmers covering nearly 90% of all the eligible farmers.

While thanking the Chief Minister for taking out her time to set the priorities of development before the SLBC, Dr. Khandelwal indicated that the theme of the present SLBC is building human capital through RUDSETI type of intervention. He maintained that making available hand holding support for marketing of rural farm and non farm produce is a key challenge and the Government machinery will have to play a pro-active role in this field.

He told that in the series of thematic SLBC meetings, the theme of this SLBC is Rural Development and Self Employment Training Institutes (RUDSETIs) which is one mechanism to directly help rural unemployed youth to get trained, to avail Bank finance and eventually get self employed. He complimented the Hon'ble Chief Minister for her imaginative suggestion of operationalising RUDSETIs, which is commensurate with the ideological shift towards the market orientation of our economy, which has taken place during the last few decades and this also provides a great opportunity to solve the problem of unemployment. He was grateful to the Chief Minister for her suggestions of having one RUDSETI in each district. He cited the happening event preceding the SLBC meeting, where the inaugural function of Bank of Baroda's 8th RUDSETI at Ajmer was visibly marked by the overwhelming response amongst women with more than 2000 ladies attending from all over the district. He also announced that Bank of Baroda's 9th RUDSETI at Banswara for the districts of Banswara and Dungarpur, will be opened soon. Dr. Khandelwal appreciated the enthusiasm shown by the Banks in this field.

While stressing upon liberal financing to SHG by Banks in order to make SHG movement an instrument of women empowerment, he impressed upon the house that after 30-40 years only one programme of SHGs was really converting raw energy of women into a concrete agenda for the nation and it is time to really make it happen in true sense as we have to make sure that the SHGs succeed. On behalf of all Bankers, Dr. Khandelwal assured the Chief Minister that all the Banks would come forward to make SHG a very successful experiment and RUDSETI a thumping success in the State of Rajasthan. He also told that we have to include specific types of marketing inputs in our strategies, which inculcates confidence, sales technique and marketing skills in women. He desired that we have to involve the management students of various management institutes to undertake studies because we need to understand the Rural Credit so as to evolve strategies for covering them.

Dr. Khandelwal observed that financing management students is safe but one of the most important aspects is how to identify summer trainees for financing them. He emphasized on computerisation of land records and making these records available on line. Some States have already moved in this direction and Rajasthan will also have to do something in this regard. He observed that promotion of contract farming and credit to tenant farmers were the new areas of finance. Chairman and Managing Director suggested that there are vast areas to cultivate, which can be transformed into productive assets through involvement of corporates. Crops like Jatropha from which bio-diesel can be a huge scope in Rajasthan is one such example. He proposed amendment in Public Demand Recovery Act for recovery under Industry, Service and Business sectors as other States in India have already a separate Act in this regard. He urged the house that Bankers have a moral responsibility to help people, who are at the bottom of the pyramid. He requested the Chief Minister to grace the State Level Bankers' Committee Meeting at least twice a year.

Shri J. R. Sarangal, CGM, NABARD in his speech flagged following issues for consideration: -

Referring to the RBI instructions making the Potential Linked Credit Plans being prepared by NABARD as the basis for credit planning for 2006-07 onwards, he indicated that the exercise of preparation of PLPs and their dissemination among the stakeholders is complete and hoped that banks would complete the credit planning process in time. Highlighting the sectoral potentials for financing during 2006-07, he indicated that aggregate potential has been assessed at Rs. 14880.00 crore with major share of 67% going to agriculture. Emphasizing the need for regular monitoring of the credit plans, he urged the SLBC to institutionalize a mechanism for review of performance of credit disbursement against the quarterly targets set under Service Area Monitoring and Information System (SAMIS). This would call for strengthening of SAMIS, ensuring timely submission of return and timely processing of data by the Lead Banks.

Expressing his concern at the declining share of agriculture terms loans in total agricultural credit flow he indicated that for rural capital formation in agriculture economy, banks may have to significantly step up credit disbursement for agricultural term loans.

Complementing the State Govt. and specifically the Department of Women and Child, Shri Sarangal mentioned that 98,500 SHGs were credit - linked till date with cumulative bank loan disbursement of Rs. 210.00 crore. During the current year, 37,500 SHGs were financed with bank loan of Rs. 87.00 crore. He indicated that under the state initiatives, SHGs are being promoted under various programmes by ICDS, DRDAs, department of watershed development, literacy mission, forests, etc., with each of them adopting various systems and practices. Given the large scale of state interventions, he felt that state level coordination among these organisation has become important. The State Govt. may like to consider evolving a suitable Central Coordination Mechanism at State and district levels for healthy growth of the SHG movement. This would lead to creation of favorable environment for promotion of additional 1.5 lakh quality SHGs that are required to provide financial inclusion to all the rural poor families in the State. He also complemented the Hon'ble Chief Minister for waiving stamp duty on SHG loan. He emphasized the need for scaling up training of the field staff of these organizations, upgrading the quality of book keeping at SHG level and facilitating graduation of members to macro enterprise stage. He shared that in this direction, NABARD has launched a pilot project in Ajmer district aiming at providing support to 1000 women members of SHGs.

Highlighting the need for expanding agriculture term loans, Shri Sarangal indicated good scope for (i) financing of field channels under completed irrigation projects funded out of RIDF for which the State government may come forward to forward loan applications, (ii) rural godowns and market yards in view of amendments of APMC Act in the state, (iii) animal husbandry where credit flow can be easily stepped up nearly 3 times of the present level, (iv) micro irrigation, bio fuel and horticulture. He suggested that State Govt. may like to prepare a Banking plan for enhancing the agricultural term loans.

Smt. Usha Thorat, Deputy Governor, RBI in her address indicated that the present SLBC meeting, being held in the backdrop of the Union and State Budget for 2006-07, was very timely and should lead to follow up on the budget announcements. For this, she suggested to form sub-committees of SLBC for different thrust areas, which could focus on specified areas of importance and function between successive SLBC meetings. These could come out with concrete, actionable and monitorable plans. She highlighted the need for Banks' plans to be in tandem with budget priorities and directions for optimum results and indicated that the Chief Minister's presence in the State Level Bankers' Committee was very welcome and said that active participation at SLBC at senior level would ensure greater commitment both from banks and government functionaries. She complemented the State government for the fiscal prudence exhibited in the budget and for having clear focus on agriculture, textiles and SME sectors as this could create an environment for higher investment. In a country with nearly 70 % people depending on agriculture, there was a need for the banks to increase credit flow to agriculture by financing the entire value chain and increase agricultural production/ productivity. The Deputy Governor wanted the State Government to create an enabling environment for increasing investments in the areas like construction of godowns, irrigation system, rural connectivity, rural marketing, etc.

Emphasizing the need for stepping up investment credit in agriculture, she indicated that the state also needs to strengthen the credit delivery system, especially the cooperatives through implementation of Vaidyanathan Committee recommendations and RRBs. She shared the concerns of the RBI for RRBs for which it has set up an Empowered Committee on RRBs. Sharing the discussions she had with RRBs on the previous day, she indicated that the RRBs have promised to double their balance sheets in two years time. She informed that RRBs were going to be an important instrument for rural credit and the Empowered Committee under the Regional Director of Reserve Bank of India was working on various measures to facilitate the growth of RRBs.

Referring to the on going exercise of mergers of RRBs, she also underlined RBI's commitment to impart training to the personnel of Cooperative institutions and RRBs. She then referred to the Empowered Committee for SMEs constituted under the Regional Director's Chaimanship at Jaipur and suggested adoption of committee approach at the district level for discussing the issues relating to financing of SMEs.

Highlighting the RBI priority for providing banking services to all the households, she called upon the Banks to provide financial inclusion to the lower strata of the society by opening special deposit accounts and also extending small loans through appropriate products like General purpose Credit Card to all such families with simplified loan application forms. She referred to the Committee on Financial Inclusion announced by the Hon'ble Finance Minister and explained that financial inclusion meant every house hold having a bank account and being able to avail of Bank finance of small amounts without the need to produce collateral security. Referring to the Banking Ombudsman Scheme she indicated that the new scheme has been designed as a zero cost grievance reddressal mechanism and invited all concerned to derive its full benefits.

Smt. Thorat also called upon the banks to take advantage of the recent policy announcements made by RBI on banking facilitators and correspondents through appropriate schemes.

Hon'ble Chief Minister, Smt. Vasundhara Raje, in her address, called for better collaborative action between Banks and the government. Agreeing with the observations of Smt. Usha Thorat, the CM asked the SLBC to have more sub-group level discussions between the two SLBC meetings. She referred to certain policies announced to benefit farmers in the latest State budget, notably increase of subsidy for schemes like sprinkler, drip irrigation etc. Highlighting the priorities of the state government. She revealed an ambitious micro irrigation programme aiming at covering 6-7 lakh ha land. She urged the banks to come forward in financing the drip and sprinkler irrigation units on a large scale. She assessed the loan requirements for micro irrigation in the range of Rs.2000 crore. She announced that the stamp duty on SHG loans had been waived by the State government. She also called upon the banks to increasingly finance agri business, agro processing and agri marketing sectors on a large scale, for which a conducive environment had been created by the State government by amending the Agricultural Marketing Act. She also indicated the plans of the state government to take the Horticulture Mission beyond presently covered 11 districts.

Complementing the banks for achieving the priority sector targets in the State, she emphasised on the need for ensuring timely disbursements under various poverty alleviation programmes. She also expressed concern at the gap between the loan applications sanctioned and loans disbursed under various government sponsored schemes.

On the problems being faced by the SSI sector, the CM observed that the credit flow to SSI sector has declined from 24 % to 16 % in recent years. She expressed surprise that while stress was being given on SSI/ SME sectors, credit flow to SSI segment as a proportion of total priority sector credit had gone down in the recent period largely due to insistence on collateral security and that despite necessary instructions, the Banks are still insisting on the collateral security although Reserve Bank of India's instructions were clear on not insisting upon the same upto a certain level. Drawing the attention of the senior executives of The Bank of Rajasthan Ltd., she expressed displeasure about their insignificant contribution in the State as the performance continued to be highly unsatisfactory, she said that that it was dismal especially in respect of PMRY and advances under all other government schemes.

Complementing the banks for coming forward in financing SHGs, the CM emphasised the need for simplification of the loan procedure, account opening formalities, having uniform loan application forms etc. as people were finding it difficult in coping up with complicated applications forms. She also advocated for proper pricing of loans with interest rates based on the repayment record (interest on loans to SHGs with downward bias). She expressed anguish that the progress in implementation of PMRY was unsatisfactory although the scheme was meant for removal of poverty and generation of employment. The Chief Minister also expressed her concern at low levels of disbursements under PMRY which were at 42 % at February 2006. She observed that banks were still insisting on collateral securities from PMRY borrowers. The Chief Minister also observed that the progress under artisan credit cards at 1,227 was too low compared with the target of 50,000. She also expressed her concern at only 37 units being supported under CLSS scheme.

Thanking the SLBC Chairman for the opportunity given to her, she assured that she would attend atleast one SLBC meeting every year and directed the officials of the State government to ensure appropriate attendance at all the meetings as this body provided an effective forum to discuss various issues.

She thanked banks on the establishment of RUDSET Institutions observing that they go a long way in eradicating poverty of the rural populace. The position with regard to RUDSETIs, coverage across various districts in the State was also reviewed by the Hon'ble Chief Minister.


Following Banks indicated that they will operationalise RUDSETI in following districts by March 31st, 2006.


Dr. Anil Khandelwal, CMD, Bank of Baroda offered to establish two RUDSET Institutes at Banswara and Chittorgarh Districts while UCO Bank proposed to set up one RUDSETI in collaboration with Jaipur Thar Anchalik Gramin Bank at Jodhpur. Chief Minister called upon SBBJ for one more RUDSETI in one of their lead district. Mr. Bhattacharyya, MD, SBBJ said that they would assess the viability and get back to Chief Minister's Office.

Sh. S.K. Bhattacharyya, Managing Director, SBBJ referred to the meeting of the Empowered Committee on SMEs at RBI and noted that SME financing has improved. He expressed confidence that their Bank would be able to double SME financing within 5 years. However, rehabilitation of sick units was posing a problem as the number was large and banks' money was getting stuck up in these units. He asserted that the rating score accorded by SMERA did not have correlation with the internal rating as assessed by banks. He emphasised upon the need for credit rating of SME sector in a much more scientific manner and to make it easy for banks to pick up the credit and price the risk correctly. The Honb'le Chief Minister suggested that units suffering on account of non-payment/ delayed payment by large units should be given extension of time for repayment. The Deputy Governor wanted the Bankers to avail of the scheme of OTS and debt restructuring, wherever applicable. Referring to the report of the Working Group on Flow of credit to SSI Sector (Ganguly Committee), she observed that there were three types of units in the SME sector viz. Ancillaries, which depended on the large units, units in the clusters which were on a stand alone basis and handicraft units which supply material mostly in the local market and suggested hand holding for the units under the second and third categories. The Deputy Governor enquired from the bankers the recovery experience under PMRY schemes, which as told by Shri. Bhattacharyya was around 23 %. She advised that the recovery levels should improve. Secretary SSI expressed the basic need of sensitizing the field functionaries mostly in respect of SSI and collateral free advances.

Ms. Daruwala, Chaiman and Managing Director, Central Bank of India in her address told the house that CBI too had done good job i.e. the C:D ratio was 50% in Kota, 68% in Jhalawar and 111 % in Baran, although there was much room for improvement. She said that they had identified certain branches, with necessary infrastructure for SSI delivery channels. Central Bank of India was trying to ensure that in the industrial estates of Kota and Jaipur, the SME sector was given a boost. CMD, Central Bank of India made a mention of promotional initiatives taken for increasing the number of SHGs. She sought government help in effecting recovery in respect of loans granted under PMRY. She also stressed upon timely sponsorship of applications under Government Sponsored Programme.

Mr. B.M. Sharma, Managing Director, The Bank of Rajasthan Ltd. explained the critical position of his Bank in the past wherein they had to take radical steps even for the survival and on that account they could not honour the various targets under Government Sponsored Programme. But with the transition period over, he assured that their position of participation in Government Sponsored Schemes would improve in the coming period. He aired the sense of belongingness to the State and committed that his Bank would definitely adhere to the implementation of the Government Sponsored Schemes as well as other developmental programmes. He also proposed operation of one more RUDSETIs besides the existing one at Udaipur on the line of Bank of Baroda.

Sri C.P. Swarankar, Executive Director, Punjab National Bank suggested a proper census of sick units to be conducted. The Deputy Governor, RBI however, asked the Banks to compile the figure themselves. Mr. Swarankar extended an invitation to the Chief Minister to visit the PNBs RUDSETIs at Neemrana. It was suggested that next SLBC meeting be held at Neemrana. Punjab National Bank agreed to host the next SLBC meeting at Neemrana

Sh. R.M. Nair, General Manager, SIDBI brought to the notice of the forum the various initiatives taken by SIDBI for the development of micro enterprises and SME development etc. It was indicated to the Forum that RUDSETI, Dharamsthala who is a partner of SIDBI, will be considered for programme based support for running its training programmes at Baran district of Rajasthan.

SFMC, SIDBI has been persuading established microfinance MFIs to start their operations in under served States and the Bank is actively considering an application for term loan and capacity building grant assistance for microfinance lending at Baran District, Rajasthan from one of the South based agency. The agency is expected to commence its operations soon.

As regards the comments made by the CM on the low coverage of CGTSI cases in the State, it was clarified to the Forum that by February -end 2006, more than 650 SSI units for an aggregate loan amount of Rs.1485 lakh have been covered by CGTSI in Rajasthan. The low coverage from the State is on account of the fact that only 17 banks have become members of CGTSI. With the latest Budget announcement, the guarantee fee for CGTSI coverage has been drastically reduced and hence a large number of units could be given CGTSI coverage. The representative of SIDBI requested SLBC to persuade its member Banks to get themselves registered with CGTSI and cover more collateral free loans to the SSI sector from the State of Rajasthan.

As regards the observations of MD, State Bank of Bikaner & Jaipur, it was clarified that SMERA has received overwhelming response from Banks across the country and a large number of applications have been forwarded by many Banks for rating by SMERA, which only indicates the credibility of the rating reports of SMERA as it is using innovative skills and tools for rating purposes. It was also indicated that in case any Bank wants to train their officials on technical subjects like rating etc. SIDBI could consider funding the same from its World Bank Project.

It was also informed that SIDBI would be happy to associate itself in all the efforts for development of the SME sector in the State. The CMD of Bank of Baroda indicated that he would discuss with the CMD, SIDBI and other bankers regarding the various steps to be taken for development of SME in the State.

Smt. Alka Kala, Principal Secretary, Women and Child Development Department, Government of Rajasthan observed that nearly 1 lac SHG had been formed in the State and about 55000, which have been linked with credit. She desired greater SHG-bank linkages. Further, there was variation of interest rate ranging between 8.5 % to 12 % on loans given to SHGs which was affecting their performances. She stressed on the need for unified practices, grading of SHGs, etc as also granting concessions like tax rebate, etc. She requested the Bankers to consider financing SHGs sympathetically, as most of the women are illiterate and they do not know anything about Banking. She urged the Banks to perform the role of a friend, philosopher and guide for these poor rural women.

After this extensive and fruitful deliberation, it was the consensus of the house that the entire deliberations have covered all the agenda points and only the statistical part is left to be perused. It was noted that agenda notes being circulated well in advance, all participants have thoroughly gone through that and therefore it was decided not to repeat the same formally. More so, with all the participants both from the State Government and Banks pledging themselves for working towards the common goal of accelerated pace of development in the State of Rajasthan, the synergy should only be on more and more proactive measures to speed up the process of collaborative participation. It was felt that since the focus of this meeting was on RUDSETI and Government Sponsored Programme, the essence be maintained.

The meeting concluded with a vote of thanks to the chair and to the most distinguished guests of the evening.

Complete Addresses
Nagpur Regional Office :

Bank of Baroda Bldg. Regional Office,
Post Box No. 260
1st Floor, West High
Court Road, Dharmpeth
Nagpur - 440010
(Maharastra)

Zonal / Regional Office Bareilly :
Bank of Baroda
Zonal / Regional Office
129 - D, Civil Lines
Bareilly - 243001
(Uttar Pradesh)

Kolkatta Zonal Office :

Bank of Baroda
Post Box No. 16417
Zonal / Regional Office,
2/7, Sarat Base Road,
"Vasundhara"
2nd, 3rd Floor
Kolkatta - 700020 (West Bengal)

Central Office BCC, Mumbai

Bank of Baroda
Baroda Corporate Centre,
E- 26, G- Block, Bandra Kurla Complex
Mumbai - 400051
(Maharastra)