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MINUTES OF THE 91 TH MEETING OF STATE LEVEL BANKERS' COMMITTEE RAJASTHAN HELD AT JAIPUR, DATE 26TH DECEMBER, 2006

The 91st Meeting of SLBC, Rajasthan was convened on 26.12.2006 at Jaipur. The meeting was graced by the presence of Hon'ble Union Minister of State for Finance (Exp., Banking and Insurance) Sh. Pawan Kumar Bansal, Dr. Anil K. Khandelwal, Chairman and Managing Director, Bank of Baroda, Chief General Manager, NABARD, Senior functionaries of various Banks, Senior Secretaries to the Central Government and State Government, Representatives of Banks/ financial institutions & other 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 extended a hearty welcome to the Hon'ble Union Minister of State for Finance (Exp., Banking and Finance), Chairman and Managing Director, Bank of Baroda, Senior Functionaries and CEOs of Banks, Senior Secretaries to the Central Government, State Government & other dignitaries and participants to the meeting.

He conveyed his sincere thanks to all the Banks for their commendable performance over the years as all major Commercial Banks have done quite well by surpassing the targets of credit flow to agriculture which was 113 % and 102 % by all category of Banks during 2004-05 & 2005-06 respectively. He urged upon the Banking fraternity to ensure doubling of credit flow to agriculture by all means, particularly formulating the schemes to diversify the agriculture with a focus on high tech agriculture.

Convener, SLBC expressed his happiness on 8 % & 10 % growth in both aggregate deposits and advances respectively in the State of Rajasthan as on Sept. 2006 over March 2006 level. He narrated at length that Banks in Rajasthan have extended credit to Priority Sector to the extent of 48.85 % of total advances as against the stipulated norm of 40 % and also the share of agriculture advances stands at 27.77% to total advances against the stipulated norm of 18 % as on Sept. 2006, which again is an outstanding performance. Due to all out efforts of all the members, CD Ratio for all the Banks in the State stands at 88.24 % as of Sept. 2006, against the stipulated norms of 60%.

Zonal Head, Bank of Baroda referred that recovery of priority sector lending is a major concern of Banks and this burning problem is discussed in every SLBC meeting because a huge amount of Bank credit is stuck up with defaulters and the same is mounting year after year. Bankers have filed numerous cases with revenue authorities, but desired outcome is still awaited.

He appealed to the concerned authorities to chalk out a time bound programme to dispose of the pending cases filed under RACO ROD Act, under Agriculture Recovery Act for the State. He further suggested that for this purpose targets will have to be given to the concerned authorities and followed up regularly (specially the recovery under PMRY) because the Banks are the custodian of public money and the recycling of this money to the Priority Sector lending in future depends on that.

He appreciated the gracious presence of the Hon'ble Minister of State for Finance to guide the deliberations and visualized his presence as a great source of strength and support for achievement of the desired objectives which in turn will further create a better, cleaner and healthier environment for Banking industry in Rajasthan, although the same is looking upbeat.

Shri R. Narayan, Chief General Manager, NABARD congratulated all Banks for maintaining exceeding good C:D ratio at 88% in the State. He focused on some other sectors within the agriculture sector which Banks could target for further lending after looking at recovery performance. Shri Narayan revealed the fact to the house that in State like Rajasthan where 1/3 area is covered with desert, there are some other areas where we have other challenges, financing of certain investment activities like Rain Water Harvesting Structures is worthwhile. He informed that there are schemes of Government of India where subsidy component is also available, but these have really not taken off upto the desired extent in the State. He also congratulated the Bankers for excellent performance shown by them in SHG Bank linkage Programme. Chief General Manager, NABARD requested the Bankers to repeat this performance in order to link remaining population with SHG movement. Shri Narayan was satisfied with the performance of Banks under Farmer clubs where about 896 farmers clubs have been promoted as of today. However, Kisan Credit Card Scheme needs to be seen as more than NABARD's scheme. He requested all controlling offices of the Banks to pass on the instructions to their branches and also to sensitize their branches to tone up this programme because in those branches where Kisan clubs have been promoted and are active, not only the lending has got diversified but Kisan clubs have also helped in recovery of the loans.

Shri. B.P. Vijayendra, Regional Director, Reserve Bank of India in his address congratulated the house and complimented everyone involved in preparation and the launching of the SLBC website on this historic occasion of 91st SLBC Meeting in the presence of Hon'ble Minister of State for Finance, Government of India. He shared with the house that excellent progress has been achieved under the 100 % financial Inclusion in Rajasmand District. He put forth before the house the progress achieved in the process of financial inclusion. As per latest available information, out of 1025 villages the survey has been completed in 857 villages and in 453 villages 100 % Financial Inclusion has been achieved within a short span of few months, which speaks volumes. He also complemented District Collector of Rajasmand for his commendable leadership and efforts in this regard & enthusiastic involvement by Banks led by State Bank of Bikaner and Jaipur in Rajasmand District. He also assured that target of 100 % Financial Inclusion by 31st March 2007 will be achieved before the stipulated date in Rajasmand District.

Sh. Vijayendra informed the house that an Internal Working group under the chairmanship of Mr. C.S. Muthy of Reserve Bank of India, has proposed to bring about wide ranging changes in the definition of Priority Sector and linked it to Adjusted Net Bank Credit. He requested members to visit RBI website and offer comments

Regional Director categorically said that the number of farmers in distress as reported in last SLBC Meeting has increased from 1.27 lac in 2004-05 to 1.41 lacs in 2005-06, though this constitutes about 3.5 % of total number of eligible farmers, yet there is need to be vigilant so as to avoid occurrence of Maharastra and Andhra Pradesh type of situation in Rajasthan. He informed the house that Reserve Bank of India has issued instructions to all the Banks that in order to assist such distressed farmers defaulting in their loans due to circumstances beyond their control, the Banks may frame transparent One Time Settlement policies for such farmers with the approval of their boards. He observed that agenda papers in the successive SLBC meeting reveal that the performance under various government sponsored schemes in the State has given rise to considerable concern. He, therefore, suggested the constitution of 'sub group' of the SLBC, which may function on an ongoing basis, to look into various aspects connected with financing under Government Sponsored Schemes and submit its findings to the SLBC.

Convenor, SLBC submitted that the suggestion of sub group formation for Government Sponsored Schemes would be taken care of. This SLBC has already effective sub groups on Agriculture and SSI in the leadership of various major Banks and they are effectively functioning and not only that, RBI is regularly convening meetings of a high powered committees for SMEs and RRBs.

Shri Srivastava thanked members of State Level Bankers Committee who helped in launching of SLBC website. Before switching over to agenda point Hon'ble Union Minister of State for Finance, Government of India inaugurated SLBC website and also showed some contents of the SLBC website to the house. He told that this website will provide information about implementation of various Schemes by the Banks, progress of various programmes, history of SLBC, minutes of SLBC meetings, related data, RUDSETIs etc., so that anybody who is interested in this website can visit the site and know a lot of things about SLBC.

Dr. Anil K. Khandelwal, Chairman and Managing Director, Bank of Baroda extended a warm & hearty welcome to Hon'ble Union Minister of State for Finance, Sh. Pawan Kumar Bansal, all the dignitaries and participants. He congratulated all the Bankers for the CD ratio of 88 % in the State of Rajasthan and thanked everyone for their collaborative efforts for this achievement. He said that such a splendid performance should also be repeated in the Priority Sector Advances and Agriculture Advances, although these parameters are already well placed - Priority Sector at 48 % of the total advances as against the stipulated level of 40 % and - Agriculture credit achievement at 27%, as against the stipulated norms of 18 %, it is a result of good performance by all the Banks in the State. He urged the Bankers to create new paradigm in Banking in terms of figures, statistics because quantitative achievement is also a landmark. However, most important for Banks is to move into a new paradigm in the area of Financial Inclusion and use of technology and technological innovations in rural areas. Chairman and Managing Director, Bank of Baroda emphasized on the farmers' education which requires to be designed in such a way that farmers and the people in rural areas can some day take benefit of this SLBC website. He was of the opinion that this website should be in Hindi also so that common people can have access to this website. Further, the department can improve and have a feed back system making it effective and result oriented. He also stressed that the issue of innovations is very important in the rural areas because when government and Banks are proactive, we must use such technology that reaches the farmers. Some good experiments have been done by ITC Chopal. He suggested that it is time now for the State Government and the Bankers to move together in the direction of bringing technology to farmers and general poor and work collectively on this issue.

While talking about Economic and Monetary Conditions, he pointed out that :

1. In the first half of 2006-07, real GDP grew at 9.1 percent compared to 8.5 percent during the same period last year. During the second quarter of current fiscal GDP growth was at 9.20 percent.
2. The industry sector grew by 10.3 percent during the second quarter of current year.
3. Services sector grew by 10.9 percent during April-Sept. 2006 and remained the leading sector of the Indian economy.
4. Strong acceleration in deposit growth was able to accommodate sustained growth of Bank credit.

After this detailed deliberation he highlighted the Mid-Term Review of Annual Policy Statement 2006-07 :

1. Repo Rate increased to 7.25 percent from 7.0 percent.
2. Reverse Repo Rate and Bank Rate have been kept unchanged at 6.0 percent.
3. RBI increased the CRR from 5 percent to 5.25 percent from December 23 and from 5.25 percent to 5.50 percent from January 6, 2007. This will result in absorbing Rs. 13,500 Crore of resources from the Banking System.
4. The year on year growth in aggregate deposits at Rs. 3,93,849 crores (20.7 percent) was higher than that of Rs. 2,98,229 Crore (18.6 percent) a year ago.
5. Financial markets continue to remain stable and orderly in the second quarter of 2006-07 although interest rates have firmed up in almost all segments.
6. Indian Banks having presence outside India and foreign Banks to migrate to the Basel II framework effective March 31, 2008 and other scheduled commercial Banks to migrate in alignment but not later than March 31, 2009.

He observed that :

1. While global growth has been strong and broad-based, there are some indications of moderation like the cooling of the US housing market and the potential drainage of liquidity from financial markets.
2. There are indications of growing demand pressure and potential risks from rapid credit growth, strains on credit quality and elevated asset prices. High level of monetary expansion and the evolution of liquidity situation need to be continuously monitored for any signs of risks of inflation.

He advised to the august house to look at 59th round of National Sample Survey wherein it is indicated that out of total number of cultivator households only 27 % received Bank credit from formal sources and 22 % from informal sources which has really poised challenges before us. He also appreciated Reserve Bank of India for their policy on Financial Inclusion inspired by which all financial institutions are moving towards this. He informed the house that Self Help Groups in India and neighboring countries have made tremendous progress and need to look at it because here recovery performance is also very good. He was delighted to share with the house that in Rajasthan 7 RUDSETIs are operating, where philosophy is transformation of rural youth to acquire productive identity through short duration intervention. He said that RUDSETIs, a very pioneering and innovative experiment that Bankers have done here, is really flourishing and there is a greater enthusiasm to set up more and more RUDSETIs as proposed by various Banks.

He requested Secretary, SSI & KVI to look into the matter of Credit flow to SSI Sector in Rajasthan which although over a period of time in absolute term has witnessed upward trend but it is seemingly declining as a percentage of priority sector. He then talked about Recovery under Priority Sector where more than 160000 cases are pending under RACO (ROD) Act with various revenue authorities and response is much below the expected level. Under PMRY a huge amount of Banks' fund is stuck up and recovery percentage is abysmally low ranging from 32 % to 38 % amongst the districts. He requested the State government to amend Public Demand Recovery Act at the earliest and also urged upon the Government Authorities to launch Special campaign for disposal of pending cases under RACO (ROD) Act in the time bound manner. At the end of his address he thanked Hon'ble Union Minister of State for Finance for coming to SLBC Meetings having inaugurated SLBC website.

Shri Pawan Kumar Bansal, Union Minister of State for Finance (Exp., Banking and Insurance), Government of India in his Key note address said that though Banks and Government in the State together have worked tremendously but they have also to concentrate where the performance is poor. He considered Banking sector to be a very important potent vehicle in the growth story of the Country. He appreciated the efforts and enthusiasm being exhibited by Bankers under Financial Inclusion and setting up of RUDSETIs. He was glad to see that responsibility which was cast upon Public Sector Banks, years back, still continues to be significant with all relevant dimensions. He invited some other Banks to come forward (like other States of the country) to adopt other districts also for 100 % Financial Inclusion in the State of Rajasthan with the same enthuasism as they have shown in setting up of RUDSETIs. He reminded that when States like Himachal Pradesh and Uttar Pradesh have done it, it should not be difficult for Rajasthan and all the Banks should be associated with the exercise.

Shri Shyam Agarwal, Principal Secretary, Agriculture urged the house to follow the Minister's call for financial Inclusion within the time frame. He submitted that Rajasamand is a normal size district and as such we have to go a long way in ensuring 100 % financial inclusion in the State.

Shri Bansal also complimented for excellent CD ratio and other parameters presented by Banks but he underlined the need to strive for the growth of advances and deposits which is much below the national average. He pointed out that under Government Sponsored Programmes, the growth is not even upto the Banks own satisfaction - the disbursement is also very slow and there is downward trend in the advances to the Small Scale Industries Sector. He observed that Small Scale Industries is really being neglected and urged to sort out the problems that hinder flow of credit to this sector.

Agenda No. 1

(i) Confirmation of Minutes of 89th SLBC Meeting held on 15.09.2006.

The house confirmed the minutes of 90th SLBC Meeting held on 15.09.2006, which were circulated on 29th of September 2006.

(ii) Status of Action Taken Report

Convenor, SLBC informed the house about the status of following issues, which SLBC has taken up with concerned members / institutions and had invited reactions of the participants:

1. Natural Calamities - Flood Relief in 12 Districts, Particularly in Barmer : The house was informed that Regional Director, Reserve Bank of India and government is very proactive to extend all possible help to flood affected population. Convenor, SLBC said that Barmer was declared as flood affected district at Special DCC meeting held on 28.09.2006 and all operating Banks committed to provide relief, as per norms, for restarting economic activities and also for rehabilitation process.

2. 100 % Financial Inclusion in Rajasmand District : The progress is being vigorously monitored by RBI and the SLBC sub-committee at regular intervals and as the survey completion date of 31st December 2007, will have to be adhered to and 31st March 2007 will be the 100 % declaration of the financial inclusion of that District.

3. Enactment of Public Demand Recovery Act : Sh. Srivastava informed the house that despite our best efforts, the issue is still pending with the State Government. Hon'ble Minister urged the State Government that in Government Sponsored Programmes like other States, there should the same provision where Banks' dues under Government Sponsored Programmes can be treated as arrears of land revenue. Sh. D.P. Kanoongo, Deputy Secretary informed the house that the opinion of Law Department that under the entry 45 of the list I of the 7th Schedule, the amendment can be made by the Central Government & not by the State Government and they have referred this case to the Advocate General for his opinion. However, they have yet to receive the opinion of the Advocate General.

Convenor, SLBC informed the house that it was decided in SLBC Meeting that all Banks' major empanelled advocates will meet Advocate General of the Government and present their views. We also provided Bare Act of other States where such Acts are applicable to the Government but Law department still says it can't be enacted. It still remains an impediment in recovery of Bank dues under Government Sponsored Scheme. Minister said that this has to be treated as arrears of land revenue and law should be invoked if needed. A senior Bank suggested that in Madhya Paradesh there is an act namely Brisk, where Bankers are sending all the applications to Government and Government is charging for Public Money Recovery, 2.5% as services charges and ensuring recovery.

Chairman and Managing Director, Bank of Baroda expressed his concern and said that certain degree of commitment to this Act is required from State Government because Banks have almost stopped performing in Government Sponsored Programmes and this gap between sanction and disbursement has increased with less recovery and Government should have a desire to proceed further. The Minister assured the Bankers that Government will expedite the matter further.

4. Issuance of Artisan Credit Card to Accredited Artisans : Convenor, SLBC briefed that Government of Rajasthan had issued Accredited Artisans Cards and Bankers are required to finance Artisans Credit Cards to them within their cap of Rs. 25000/-. Convenor SLBC informed the house that situation has improved but not upto the desired level.

Agenda No. 2

Performance under Key Business Parameters as of Sept. 2006.

The house noted that performance of the Banks on Key Business Parameters as of Sept. 2006 which amply demonstrate that performance of Banks on all the related parameters is satisfactory except Weaker Section Advances which is nearing benchmark level of 10 % and over the time the qualitative aspect of credit control specified various sub sectors of Advances wherein credit flow to be ensured as per the directives of Reserve Bank of India.

Convenor SLBC told that that there are all together 3980 branch offices providing Banking services to the masses, more than 60 % of these are operating in rural areas. He said that Banks have registered 7.96 % deposits growth as on 30.09.2006 and growth in advances is one and a half times of the deposits growth (10.02%).

Position regarding Social Banking Parameters as on Sept.06 is excellent which is evident from the following figures.

1. C D ratio 88.24 % as against the benchmark of 60 %.
2. Priority Sector Advances 48.85 % as against the benchmark of 40 %.
3. Agriculture Advances to total advances is 27.77 % as against the norm of 18 % percent.
4. Advances to weakers sections are 9.8 %.

Regional Director, Reserve Bank of India mentioned that out of 32 districts in the State of Rajasthan only Dungarpur District has a CD ratio below 40 %. He said there is a committee of SLBC, which looks into the matter and progress reported now is 35.27 %, which is yet not upto the desired level of 40%.

Minister of State for Finance mentioned that in Priority Sector lending Dena Bank, HSBC, State Bank of Hyderabad, Indian Bank, State Bank of Saurastra are some Banks which have below 20 % to their advances and they have to improve it. He said that each Bank should aspire to achieve benchmark of Social Banking norms. CMD, Bank of Baroda pointed out there are still many Banks in the State which have very low CD ratio. Managing Director, The Bank of Rajasthan Ltd. assured the house that his Bank will improve CD ratio in a phased manner within time frame with better services and quality advances.

Principal Secretary, Agriculture urged the Banks to improve in Agriculture Sector where some Banks are lagging behind to perform in this sector. Canara Bank and Bank of India were also urged to perform in Agriculture sector because they had also a good branch network in the State. Representative of State Bank of India informed the house that they already have 181 Branches in the State and soon they are going to open 10 more Branches and 10 Extension counters will be upgraded to full fledged Branches.

Agenda No. 3

Doubling the flow of credit to Agriculture

Convenor, SLBC expressed his satisfaction that in 2004-05 and 2005-06 Banks performance against the target is reasonably good-reaching the level of 113.4 % and 102.4 percent respectively and upto September 2006 it bears on 51.7 % which is an indication that we are on course to achieve 100 % in next 6 months. However, the performance needs to be further improved in terms of extending credit to fresh loans under relief measures rather than expanding credit flow for setting up of agri clinics and agribusiness centres, financing for redemption of private debts.

He brought to notice of the house a serious concern which was discussed in 89th SLBC Meeting also - Coverage of Tenant Farmers/ Oral Lessees / Share Cropers where the Government and the Reserve Bank of India are always stressing on lending these segments and Banks' performance in these segments is not upto the desired level. He wanted to know about availability of such farmers in the State, their identification and also about some sort of documentary evidence for tilling the land so that Banks can extend more credit to such category of farmers.

Hon'ble Minister asked the Bankers that what type of documentary evidence they expect from oral lessees because a farmer can't furnish any document whatever so required, under the circumstances how Banks can extend some loan to him ?

Regional Director, Reserve Bank of India informed that it was observed in the meeting with Hon'ble Finance Minister and Chairmen of Banks that Regional Rural Banks in the State of Rajasthan are not extending financial assistance to these categories of farmers and members are in a bid to see how it is being done in other States, if Rajasthan is single doubt for it. He preferred to have some benefit of experience from these States to replicate the same in Rajasthan State. He added that the Bankers would like to have some paper on the basis of which they would like to give their assistance to such farmers. Regional Director, RBI invited guidance from Minister in this regard. He said that they will take up this issue with State Government and discuss with Principal Secretary also.

It was suggested by the Minister to evolve some mechanism and sort it out because once we have a scheme or some mechanism then we don't come up to it, that's counterproductive.

Deputy General Manager, NABARD said that referring to going back the issue of finance to tenant farmers, in 89th meeting of SLBC Sh. Ram Lubhaya tried to answer it by saying that :

1.To get exact number of tenant farmers is difficult
2.As far as lending technologies are concerned, tenant farmers can't produce a certificate of tenancy rights but there is a alternative available in the form of financing joint liability groups, where group is financed based on peer recommendation & also involves Panchayati Raj Institutions (PRIs) to verify the bonafide of the claimant. Having evolved the schemes of Joint Liability Groups, NABARD has been in touch with the Banks. He felt like following example of Eastern UP and Bihar in this regards.

Hon'ble Minister urged the Bankers not to really insist on the documentary proof, because if they insist on documentary proof which means they can't ever find a situation where they can lend to these category.

Convenor, SLBC narrated a recent development where NABARD had discontinued to convene the function of State Level Unit Cost Committee meeting for fixation of unit cost of Agriculture investment items and asked Banks to assess the need of the farmers on a case to case basis and provide adequate credit based on their own appraisal. Sh. Srivastava requested NABARD to reintroduce it in order to maintain uniformity in the unit cost. Although Banks are free to fix their units cost in respective districts through the mechanism but this has a fraught risk that in the same district, for the same activity, for the same type of land, for the same Kharif or Rabi Crop, unit cost may differ.

Deputy General Manager, NABARD assured that based on National Level feed back they can relook into fixation of units cost. He told that they would definitely examine and try to take a view because this has all India implications. In Rajasthan, he said that they have taken note of this and matter will be referred to NABARD Head Office.

Hon'ble Minister observed that many farmers have been issued Kisan Credit Cards by cooperative sectors, but some of the card holders are not yet being provided credit. He stressed for accuracy in reporting of the number of new farmers. He also asked for the data regarding amount wise component of KCC.

Regional Director, Reserve Bank of India said that continuously three years down the lines, the number of eligible identified farmers could have increased, so apparently, the State have more numbers of eligible identified farmers under KCCs.

Convenor, SLBC urged those Banks to send premium to NAIC, who have not sent premium in Kharif 2006 season and it was also brought in the notice of the house that certain RRBs have insured very low percentage of loans disbursed by them. He also requested them to cooperate the National Agriculture Insurance Company in this respect.

Representative of Agriculture Insurance Company informed that some of the Banks which are operating in a rain deficit areas are opting for more insurance whereas the Banks operating in heavy rain areas are not opting for insurance and urged to insure it for risk coverage.

Principal Secretary (Agriculture) expressed his concern that while observing advances under crop loans, agriculture and allied activities during past years, the concept of inclusive growth basically needs more lending under the allied activities because it is agriculture, horticulture and agro processing, that will finally improve economic position of the farmer and thus it also remains a repayment tool also, specially in horticulture activities.

(Action : Banks, NABARD and State Government)

Agenda No. 4

Financial Inclusion

Convenor, SLBC expressed the house some concerns wherein Banks have not been able to reach a vast segment of the population in providing them with basic Banking services growth has also not been uniform across the regions of the State and there still continue to be wide gaps in the availability of Banking services in the rural areas.

Against this back drop, he apprised the members that all the villages of Rajsamand district (Identified for 100 % Financial Inclusion) were allocated to 8 Banks namely SBBJ, State Bank of Indore, PNB, BOB, Bank of Rajasthan Ltd., Allahabad Bank, OBC and Mewar Anchalik Gramin Bank. These Banks have undertaken village household survey work started in 857 villages out of Total 1005 villages and 453 villages have been declared as 100 % Financial Inclusion.

Convenor, SLBC said that as regards position of wards, Rajasamand urban cooperative Bank with its 2 branches was allotted 8 wards and out of total 90 wards, 35 wards are now declared as financial inclusion. It was also informed that RBI and sub committee of SLBC chaired by SBBJ is regularly monitoring the issue of financial Inclusion. It is hoped that the district should be fully covered with Financial Inclusion by March 2007. However it needs greater and more vigorous follow up to ensure that this objective is achieved within the set deadline. He urged the Bankers to make accuracy in reporting of the desired data in this regard and requested controllers of the Banks to attend the meetings where the progress of Financial Inclusion is reviewed regularly.

Hon'ble Minister requested the Bankers to attend the meeting as and when Government calls, similarly Government should also be advised to attend the meeting when Bankers call and that interaction has to be on regular basis.

Managing Director, SBBJ stated that in Rajasamand District as a lead Bank they have Completed 388 villages as 100 % Financial Inclusion including opening of 'no frill account' giving GCC & KCC etc.

Hon'ble Minister emphasized that though we have covered all the families, issued Kisan Credit Card etc. but how many have been extended credit, is an important aspect for us.

(Action : Banks & Government)

Agenda No. 5

Recovery under Priority Sector

It was informed to the house that Recovery of Priority Sector advances is a major concern of Banks and this self-expressed reality is revealed almost in every meeting represented by the Government. It was deemed that Bankers are the custodians of public money and for effective recycling of Banks' funds, it is imperative that all the loans granted must be recovered as per the stipulated time schedule for which coordinated approach of Banks and Government is required.

Convenor, SLBC informed the house that the future of the Priority Sector lending and lending to developmental activities shall entirely depend upon the success of recovery efforts in any operating environment.

Sh. S.K. Bhattacharyya, Managing Director, SBBJ mentioned that amendment in the Public Demand Recovery Act has been lying with Advocate General for about 8 months which is very long period and it needs to be sorted out soon. Hon'ble Minister advised the line department of Government to cooperate Banks under PDR Act and also advised Bankers to invariably attend recovery camps organised by the District level Authorities.

Regional Director, Reserve Bank of India apprised the house that there are some District Collectors in the State who are extremely proactive in the implementation of RACO (ROD) Act and in this respect a letter has been also issued by our Chief Secretary to each of the District Collectors saying that performance in this regard, will be monitored from his desk and perhaps this is the reason that the recovery percentage in Hadoti KGB etc. is very good.

(Action : Banks & State Government)

Agenda No. 6

Credit Flow to SMEs / Artisans

While discussing the agenda on Small and Medium Enterprises, it was mentioned that this Sector has played significant role, world over, in economic development. Further it has been proved that SMEs have substantial share in industrial production, export and employment, but despite the best intentions of Government & Banks to expand the credit to SMEs, the results are far from satisfactory and it requires urgent relook on the measures of promotion of SMEs and iron out the problems hindering the growth of Credit to this sector.

Sh. Purushottam Agarwal, Secretary (Industries) regretted that the flow of credit to Small and Micro Enterprises is dismal in the current financial year (which is also declining over the years). He presumed perhaps the Banking system is not geared to address the small enterprises - they are small people, their requirement is also very small, may not even be Rs.25000/- per person and they are scattered all over the State in small villages and hamlets whereas Banking system is more urban biased and bigger town based. Again there is a segregation of the better clients, cost of transactions, being more inverse of smaller people so this system in many ways is unable to reach the small and micro enterprises. He shared his experience about micro enterprise movement/ micro credit movement has taken place at some places. Some micro enterprises have coming in the State also but the cost of funding these cases is very high, close to 25 % to 30 %. Coming to the Micro Credit options to NGOs, he said that in order to increase the outreach of formal credit to the SME sector, Regional Director, RBI reviews the progress in the quarterly meeting of empowered committee for SMEs. He informed the house that about 10 Lacs artisans are working in the State and State Government has planned to issue identity cards to 50000 Artisans, so far 34855 identity cards have been issued to accredited artisans by Deputy Commissioner (Handicrafts), which has a due process, and State Government is trying to get these Artisans Credit Cards issued from Banks in Collaboration with Government of India. All those who have been provided Artisans Identity card will also be eligible for Artisan Credit Cards. He informed the house that the figures are not encouraging in regard to the application sponsored and there is a need to look into it and make sure they get the money in the remaining part of the year also. He informed that in Rajasthan, source of employment after agriculture is Artisans and Handicrafts and there is need to act very fast and very well at implementation level.

Hon'ble Minister pointed out that Banks are not submitting data well in time and even the data reported, has not been correct. Under these circumstances it is very difficult to have a correct picture of SMEs financing in the State. He observed that the artisans did not avail the credit facility from the financial institution as per our expectations / targets. Hon'ble Minister urged to the Bankers to issue card to those people who have been sponsored and identified by Deputy Commissioner Handicrafts, Government of India after due verification and authentication's in due format and due formalities/ methodology.

Sh. Purushottam Agarwal reminded Bankers that 7 RUDSETIs opened last year and 9 RUDSETIs will be set up this year based on the commitments made by some Banks. He also indicated Government's support to Banks which entails the following elements.

1. 2 % of State subsidy on interest given to these people who are trained by RUDSETIs - for which guidelines have already been issued.

2. Land for setting up RUDSETIs - Government has issed notifications that the land will be given in the urban areas at 5 % of the reserve price and for rural areas at very nominal cost.

3. Government is to reimburse rent of the hired premises for running these RUDSETIs, this is in offing.

Regional Director, Reserve Bank of India also pointed out that there is a genuine problem of lack of authentic data from the side of Banks and as an alternative approach, Reserve Bank of India tried to get it from General Manager, DICs. Instructions have gone from Government to DICs level but still we do not have information on total number of units in the State.

(Action : Banks & State Government)

Agenda No. 7

Progress Under Government Sponsored Schemes

While observing the gap between the sanction and disbursement of the applications Sh. Niranjan Arya urged Bankers to prepare applications received register in seriatem and dispose it as first in first out method - either it is sanctioned or rejected and the guidelines of 14 days should also be followed by them.

Secretary, Industries pointed out that under PMRY Scheme even after lapse of almost 9 months of the year disbursement is abysmally low. He suggested that as Hon'ble Chief Minister said in last SLBC Meeting, applications should not be kept pending as it creates lot of dissatisfaction amongst beneficiaries.

Hon'ble Minister said that if Banks feel the scheme is not workable, make a recommendation to the Government for it, Government would rethink into it but if scheme is there then it is mandate that Banks must really achieve the targets particularly when the people from such target group are available in the State and once the training has completed disbursement should be made.

Based on the feedback of Bankers Hon'ble Minister advised the Government authorities to release subsidy under SJSRY so that many sanctioned cases do not remain pending with Banks for disbursement.

Project Director of Local Bodies Department informed that they have already issued the subsidy to local bodies and communicated to the Bankers. However, it was delayed at Government of India's level. He informed that they have evolved a mechanism through which they would be catching hold of big defaulters, direction to this effect has been issued to District Collectors and Local Bodies. He shared that the experience was not good so far through this mechanism except in 4 - 5 districts. He also expected from Bankers a rationale approach in the implementation of the scheme. The Hon'ble Minister said that this also applies to all the Government Sponsored Schemes like SCST/ SLR Schemes etc. He urged to reduce the gap between sanction and disbursement and Government to release subsidy that is concern.

Secretary, Industries brought to notice that in Barmer, which is flood affected district, more than 100 units were making a tile of Plusters of Paris, they all are washed out and they required focussed attention of Bankers and Government by organizing camps etc.

Secretary, Industries compared recovery percentage of PMRY with SHGs, where 98 % recovery available and he was in the opinion that there is some problems in administration part of this scheme :

1. There is very delay in selection of sanctions which creates lot of cost in between sanction in PMRY in terms of time and otherwise.
2. People are not getting the exact unit cost, or the project cost that they have envisaged. He said that there is a need to either review the scheme or to streamline the scheme, where there is a target of 20000 beneficiaries available in the State of Rajasthan.

Sh. Niranjan Arya said that in Barmer and Jaiselmer flood affected areas, there are 500 folk singers who have international exposure and during the flood they lost not only their house but also everything. Under the circumstances, some Banks should adopt at least those 300-400 folk singers, who really go abroad and may earn good name of our Country.

Project Director, SGSY requested Bankers to concentrate on those branches where progress is either zero or below 25 per cent.

(Action : Banks)

Agenda No. - 8

SHG Bank Linkage Programmes

Convenor, SLBC said that SHG Bank linkage has witnessed significant progress in the State of Rajasthan and there are over 1,10,227 groups in Rajasthan, providing access to financial services to rural masses and loan amount disbursed is Rs. 275 Crores. NABARD has taken several initiatives to support SHG movement in the State which includes identification of potential and emerging potential districts for promoting SHGs. Though SHG Bank Linkage programme has picked momentum in the State, however, there still are some issues like promoting quality, SHGs, proper nurturing, ensuring proper maintenance of books of accounts by SHGs, operationalising rating of SHGs by promoting agencies and Banks, putting in place proper MIS among Banks and promoting agencies and addressing the income generation needs of the nurtured older SHGs. He requested Banks to ensure that there should be no case of under finance otherwise whatever the saving and the amount of time Bank can lend, can turn counterproductive.

Sh. Anurag Bharadwaj, Director, Women and Child Department informed the house that the programme is being given top most priority in the State. It is being perceived as an important tool for women empowerment and is being monitored personally by the Hon'ble Chief Minister. He said that Rajasthan is perhaps the only State in the Country which has taken the initiative of setting up a specialized Women SHG Institute to cater to the capacity building requirements of women SHGs. As a consequence, almost 1 lacs women SHG members have been imparted various kind of training, including training of book-keeping, skill upgradation, etc.

It was also pointed out that there are almost 1.75-1.80 lacs SHGs in the State, of which the Department of Women and child Development alone, through its honorarium paid functionaries (Anganwari workers, Sathins) has facilitated constitution of almost 1.25 lacs SHGs. This clearly underlines the critical role being played by these honorarium paid functionaries in the spreading of SHG movement in the State. He also raised following two issues :

1. Recognizing and supporting Government Organizations as SHPIs : As mentioned above, the key role in promoting SHGs in the State of Rajasthan is being played by various Government Departments, the biggest player being the Department of Women and Child Development, accounting for more than 2/3 of the SHGs. AWWs / Sathins, who are honorarium paid workers, play a very vital role in promoting SHGs. Presently, there are several schemes of NABARD which provide support to NGOs for promoting SHGs. But there is no such scheme which recognizes the role of Government Department as SHPIs and provides assistance to them. If the Programme is to be sustained in the longer run then there is urgent need to correct this situation so that incentives could be provided to honorarium paid functionaries for promoting SHGs.

Hon'ble Minister appreciated this matter and directed that some suitable mechanism should be worked-out so that AWW / Sathins could be given some incentives for promoting SHGs.

2. Incentives to SHGs in the form of interest subsidy : Sh Bharadwaj requested that incentives in the form of interest subsidy should be provided to women SHGs for timely repayment. This would give a further boost to timely repayment of loans which even at present stands very high at 98 %. The house suggested that the State Government may also explore this possibility.

Deputy General Manager, NABARD informed that realizing that another 2 Lac groups are to be credit linked, this needs some body else to promote and somebody else to invest. NABARD with the kind of resources they have, can't take the responsibility of funding, meeting the total cost of promotion of every SHG. Somewhere this cost of promotion needs to be factored into the interest or pricing mechanism as ultimately it is a Bank which gets the business. DGM, NABARD told that they have started requesting Banks to explore the possibility of engaging volunteers (two volunteer per branch) in rural areas who will be promoting 10 SHG each there will be no travel cost & overheads like NGO and Government overheads. The incentives of Rs.1200 per group, which is credit linked is given by NABARD to Banks, Banks give it to SHG and SHGs give to Volunteers so mutual accountability has been factored. So the Banks can identify these volunteers and they should be anganwaris workers because government also trained them so that incentive is available with them. Sh. Dave told that this would require too big amount, hence he was in the opinion that it has to get institutionalised somewhere or may be through State government support.

(Action : NABARD, State Government and Banks)

Agenda No. - 9

Agri Clini & Agri Business Scheme

It was informed to the house that though Government of India has spent a huge amount on imparting training to agriculture graduates with an objective to enable them to undertake self employment venture, yet the performance under this scheme is extremely disappointing. Hence he requested to refresh the concerned institutes with this concept.

It was suggested that the Task Force at the district level should play a proactive role in screening the candidates at the district level and refer their cases to concerned Bank branches.

While reviewing the progress, it was found that out of 1375 candidates trained so far, only 475 have established their own ventures and out of these 475 only 41 candidates have availed Bank Credit. Members voiced their concern to introspect why the scheme has not picked up momentum. It was advised to implement the scheme in letter and spirit.

(Action Banks)

Agenda No. 10

Scheme for Development / Strengthening of Agriculture Marketing Infrastructure, Grading and Standardization -

Convenor, SLBC apprised the house that this Scheme aims at inducing large investments of marketing infrastructure for agriculture and allied activities in the country by providing credit linked back ended subsidy on capital investment for setting up / strengthening of agriculture markets, marketing infrastructure and support services such as grading, standardization and quality certification. Assistance will be available to individuals, groups of farmers, NGOs, SHGs Companies, Corporations, cooperatives, local bodies, Agricultural produce marketing committees etc.

It was observed that Branches are sending applications directly without routing through their controlling offices, all the documents required for, are not enclosed and some times even financial/ appraisal note is not attached.

Banks were requested to document the application in a proper way as also to send more and more applications/ proposals for sanctions. Simultaneously emphasis was laid on sensitizing the Banks, Bank branches and farmers through collective efforts as this is a joint effort and this is a very good thing in creating agriculture marketing infrastructure.

The Representative of The Bank of Rajasthan Ltd. informed that his Bank has sanctioned Rs. 20 Crores for the fruit and vegetable market yard in Muhana, Jaipur.

DGM, NABARD informed that in Rajasthan almost 57 market yards and mandies have been taken for upgradation. He understood that the scheme comes to the end by March 2007. He said that NABARD, based on their own experience found that there is a great potential in Rajasthan to move forward in modernization of the marketing system of Agriculture. The State Government has already amended the APMC Act and therefore the scheme has become eligible for financing. The amendment came last year so the time which was available with the State to gear up or take the benefit of this government of India Scheme, was not really adequate. He submitted to Hon'ble Minister to extend this scheme for another couple of years so the State will be able to really draw the benefit.

(Action : NABARD)

Agenda No. - 11

Annual Credit Plan - 2006-07

The Convener, SLBC apprised the house that the percentage under Annual Credit Plan 2006-07 fairly tells about the progress which is in course for 100 % achievement and all Banks have been contributing their efforts towards the achievement. He underlined that though the achievement in SSI is still below the 6 months benchmark at 45.70%, both the Agriculture and Other Priority Sector are above the benchmark level of 50 % which is self-explanatory upto Sept 06. All controlling Banks were requested to suitably advise their Branches to participate in implementation of ACP with a preferred attention on SSI Sector.

He requested the Bankers that there is need to have a relook on their policy financing of SSI and Artisans and targets in this regard should be achieved. He suggested that Artisans Credit Cards can give boost to this segment of SSI, not only in SSI it can boost SC/ST and Weakers Section also.

(Action : All Banks)

Sh. Purushottam Agarwal raised a formal agenda and informed that the KVIC has moved the proposal that as per their guildelines, SLBC has to approve pending claim of REGP margin money with KVIC. As per the records in KVIC a large number of cases joint verification has been completed in many cases and SLBC may consider it. The forum formally approved these cases.

Representative of The Bank of Rajasthan Ltd. announced that for Barmer Flood, The Bank of Rajasthan Staff have donated one day salary and they have collected Rs. 12.50 lacs which they will be handing over next week to the Hon'ble Chief Minister's relief fund.

Sh.Purushottam suggested to make the SLBC website a dynamic website including knowledge centres for the development of the districts in the State. Chairman and Managing Director, Bank of Baroda shared his views that still there are gaps in various segments and in SMEs which is the hot topic. He also talked about CD Ratio of some Banks in the State which are lagging behind and stressed to Include more districts for financial inclusion as Hon'ble Minister suggested earlier.

He earnestly and fervently, appealed to the State Government to do something about the Recovery Act. Sh. Purushottam Agarwal requested Sh. Subhash Garg to look into the issue of amendment in Public Demand Recovery Act and hoped that he would come out with an answer in the next SLBC meeting.

While concluding the meeting Hon'ble Minister underlined to monitor the Financial Inclusion and again urged to take more districts for Financial Inclusion and to achieve targets under Government Sponsored Schemes which has been opted for the accelerated development of the State. He told that the primary purpose of this meeting is to put heads together to see how to eliminate those grievances of the peoples and how to address their problems. He expected the house to continue doing their efforts.

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