Notwithstanding the State Government bearing the burden of interest subvention at 2 per cent in the interest of farmers, the performance of commercial banks on the agricultural credit front has been quite depressing in the State during 2013-14.
While the aggregate crop loan disbursement as on August 31, 2013 was of Rs 4,262.43 crore, the shares of both commercial banks and Regional Rural Banks (RRBs) stood at Rs 1,120 crore, which was only 26 per cent of the total crop loans extended to farmers.
Now, it is clear that extension of interest subvention on crop loans to the commercial banks and RRBs did not yield the desired result, revealed a senior official in the Department of Finance (DoF). When asked at the State level Bankers Committee (SlBC) meetings to increase their shares for in crop loan, the commercial bankers were complaining that famers showed reluctance to avail of loans from their banks as the cooperative banks have reduced the interest rates by 5 per cent.
Taking this into account, the State Government provided Rs 90 crore in its Budget-2013-14 for interest subvention for the commercial banks and RRBs. However, despite the dose of help from the Government, the commercial banks brought down the percentage of crop loan to 26 per cent in 2013-14 as against 37 per cent during the preceding fiscal.
In contrast, the cooperative banks, which were disbursing 63 per cent of the crop loan, hiked their share to 74 per cent. The DoF has taken a serious note of the commercial banks’ attitude, revealed an officer.
Additional Chief Secretary, Finance UN Behera has convened a meeting of the representatives of all commercial banks and RRBs on October 8 here to sensitise them on the need of increasing their shares in crop loan dispensation to the extent of at least 50 per cent during 2013-14, said the official.
When a similar situation arose in Chhattisgarh, Chief Minister Raman Singh convened a meeting of the CMDs of commercial banks and issued a veiled threat that all the deposits of the his Government and its PSUs would be withdrawn from the commercial banks. This worked well and the commercial banks have now improved their shares in crop loans in that State, said Odisha officials who are well-versed with the situation.
It is high time Chief Minister Naveen Patnaik convened a meeting of the CMDs of commercial banks and sensitised them about their roles in improving the shares in crop loan as the State Government is bearing interest subvention as per their request, said the official.