Bank Credits

2 mins read
Photo: Xuhaib Maqbool

The banks in the state have shown a miserly attitude in disbursing the credit to the people. Despite heavy deposits realised by them from the people, the financial institutions have woefully fallen short of achieving their targets on the credit delivery front.  Kashmir region has seen a major increase in the number of banks which have been opened here and even the private players have also opened their business units here. The deposits come largely as the state’s economy has seen rapid development and growth. But it is the responsibility of the banks to invest the part of the money in the state in the form of loans, but they have shied away from doing so and are not meeting their own annual credit plan targets. The government has taken a serious note of this as even the flagship schemes of Prime Minister’s employment guarantee programme (PMEGP) the credit disbursal rate has not remained satisfactory. This even as under the schemes like flagship scheme of PMEGP, the government provides the money to the bank to pay for the interest subsidy which forms the part of the scheme. The dismal performance of the banks has been taken a strong note by the government as well, which has asked the financial institutions to improve their performance. Due to the less advances the growth of the state gets stunted. Jammu and Kashmir State particularly the urban area of Srinagar has a chronic housing problem, but the banks have shied away from advancing the housing loans to the people and instead provide the loans at the high interest rates to the consumers in the consumer loans category. The priority sectors of the government have been ignored by the banks which has created a cycle of despair and hit the employment opportunities in the state. However the banks have their own problems which have been largely due to their lack of risk assessment parameters as whopping sums have piled up as non performing assets in the state. The NPAs have increased and remain in thousands of crores and the government is in a state of logjam to recover the money from the people due to the difficulty in taking over the assets and then selling them to any outsider. The state is governed by special laws which bar any outsider from owning the property here. Moreover the banks have failed to add the branch network as was targeted by them and different banks including the Jammu and Kashmir Bank have failed in achieving the targets. The majority stake in the bank is of the government. It has been seen that the banks are running from rented places and even some of them are functioning from residential areas in violation of the master plans. The government needs to fix the set up and it needs to be stressed that the financial inclusion shall be taken seriously by the banks and the benefits of government schemes reach to the people. The credit disbursal targets need to be monitored regularly in the state level bankers’ committee meet and action shall be initiated to remove the bottlenecks that come in the way of the growth of the banks.

The editorial appeared in print edition of June 21

 

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