MINUTES OF THE 137TH MEETING OF SLBC Held on 21.03.2014 137th meeting of SLBC, Tamil Nadu was held at Chennai on 21st March, 2014. List of participants is furnished as an annexure: Welcome Address: Shri.Atul Agarwal, Executive Director, Indian Overseas Bank, welcomed the participants to the 137th meeting of SLBC, Tamil Nadu. He has highlighted the various special SLBC meetings held after the 136th meeting of SLBC held on 23.12.2013. He has advised the Lead Banks to extend necessary support to SLBC to carry out the proposed study / survey on the functioning of Business Correspondents engaged by various banks in Tamil Nadu. Inaugural Address: In his inaugural address, Shri.M.Narendra, Chairman & Managing Director, Indian Overseas Bank and Chairman, SLBC, Tamil Nadu welcomed the participants and informed the forum that the performance upto the third quarter of the year 2013-14 is to be reviewed in the 137th meeting of SLBC. Highlight of performance of banks in Tamil Nadu during 2013-14: Chairman, SLBC highlighted the achievements of the banking system in Tamil Nadu. He has expressed his happiness that the State’s CD ratio continues to be above 100%. He has also informed the forum that Deposits have increased by 16.38 percent and Credit increased by 14.93 percent on year on year basis. Further he informed that the priority credit stood at 42.64 percent, Agricultural advances stood at 18.90 percent and Advances to weaker sections stood at 12.09 percent as of December, 2013 which are above the targeted level. 1 He also expressed his happiness on the achievement under various parameters under ACP and congratulated the bankers for such commendable performance. He listed the achievements under ACP upto the quarter ended December, 2013. Chairman, SLBC informed the forum that banks have achieved 101 percent of target under ACP. He further informed that achievement under Farm Sector was 102%, 98% under MSE, 105%, 93% and 111% under Education, Housing and others respectively. Chairman SLBC was very happy to inform the forum that banks in Tamil Nadu have covered under Financial Inclusion, all the allotted 7816 villages with population less than 2000. With this our State has achieved 100% coverage of Financial Inclusion in the State. He has requested the member banks to widen the domain of inclusion by opening no-frill accounts and also provide affordable credit to holders of these no-frill accounts, so that objective of the financial inclusion is fulfilled. 1. Agriculture: Chairman, SLBC has informed the forum that the State has achieved Rs.50594.42 crores up to December, 2013 against the credit plan of Rs.65481.25 crores under agriculture for the year 2013-14. He has also informed that during Hon’ble Union Finance Minister’s meeting with Heads of Banks held on 05.03.2014 the following action points emerged: a) Government has earmarked Rs.8.00 lakh crores credit flow to Agriculture in the budget for 2014-15. b) While lending to short term agricultural loans is good, the share of investment credit is comparatively low, which need to be stepped up. c) Capital formation will take place only if term loans are financed. d) Activities like drip irrigation, solar power units are to be given priority. e) Joint Liability Groups are to be promoted for the purpose of investment credit like dairy, poultry, farm machinery, minor irrigation etc. Chairman, SLBC informed the forum that NABARD in their recently released State Focus Paper for Tamil Nadu has projected an outlay of Rs.78789 crores under Agriculture for 2014-15. He has requested the member banks to focus on investment credit. 2 2. Educational Loans: Chairman, SLBC informed the forum that the banks in the State have achieved 90% under amount and 85% in no. of accounts till December, 2013. He further advised that the detailed guidelines are expected on the recently announced Government of India’s moratorium period for educational loans availed up to 31.03.2009 and outstanding as of December, 2013. This will assist the banks to reduce their NPA and also will help the students to repay their dues without much burden. 3. Self Help Groups(SHGs): Chairman, SLBC informed the forum that as of December, 2013 banks have achieved only 57% of the credit linkage target of Rs.6000 crores for 2013-14. The following are the main reasons for low credit dispensation: a) Sanctioning amount lower than recommended. b) Additional dosages are not being sanctioned. c) Under reporting the sanctioned / disbursed details whenever officials from Government call on branches. d) Part / stage release in cash credit accounts are not reported. e) Delay in processing / sanctioning. He requested the member banks to double their efforts and instruct their branches to sanction all the pending applications immediately and achieve 100% before March,2014. 4. Financial Literacy and Credit Counselling Centres(FLCCC): Chairman, SLBC informed the forum that SLBC had printed Financial Literacy posters and circulated to all the banks/ RSETIs/FLCCCs. Now, SLBC estimated a requirement of 6400 Financial Literacy Guides and 6.96 lac Financial Literacy Diaries to be printed and circulated in the State. He also added that NABARD has given the necessary in principle approval for reimbursement of cost of printing and SLBC has already started the process. 3 Chairman, SLBC appealed to the State Government to address the following issues: 1. Enumeration of SHG in the State and their registration with TNCDW. 2. Extension of Revenue Recovery Act to commercial banks for recovery of chronic NPAs. 3. Village wise enumeration of farmers and providing the list to banks. 4. Digitalistion of land records and registration of online charge and integration of State Registry with Central Registry set up under SARFAESI, Act 2002. Chairman, SLBC acknowledged the support received from RBI, Government of India, Government of Tamil Nadu & NABARD. Keynote Address: ShriT.Udhayachandran, I.A.S., Secretary (Expenditure), Government of Tamil Nadu observed the following in his keynote address: 1. The role played by all banks in achieving various targets and the amount of credit flow is commendable. 2. Even though the performance is commendable, there are certain areas which are to be addressed. 3. Though there is an improvement in absolute terms in the performance over December 2012, there is a drop in percentage terms in certain parameters. 4. There is a slight decrease in CD ratio when compared to December, 2012 level. 5. There is a decrease in Micro Credit disbursement when compared to last year. However there is a slight increase in weaker section advances. 6. The NPA is comparatively high in education and MSE sectors. While this could be attributed to the general slowdown in the sectors, the reason for higher level of NPA under Micro Credit is a matter of concern. 7. Government of Tamil Nadu has launched new schemes like NEEDS & UYEGP. The data indicates that the performance under these schemes is not satisfactory. 4 8. It is quite interesting to note that a study is going to be conducted by SLBC to analyse the functioning of banking correspondents. It is a welcome study. Economic & Political weekly recently published a report on a similar study conducted at Andhra Pradesh. 9. During the study factors like a) Qualification of the Business Correspondents b) Commission paid by different banks to BCs c) Ceiling fixed for BCs to operate by different banks d) Radius of operation of each BC e) No. of transactions done by BCs in a month f) Feedback from the customers, are to be included. Special Address: Shri.Anandrao Vishnu Patil, Director, Ministry of Finance, Government of India in his special address, appreciated the performance of banks, LDMs, controlling offices for achieving most of the financial targets. He also appreciated that all the identified villages under Financial Inclusion are covered by Banks in Tamil Nadu. Director, DFS was happy to note that SLBC is conducting a study / survey to assess the functioning of Business Correspondents in the State. He has advised SLBC to include the points suggested by Secretary (Expenditure) in the survey format. Director, DFS observed that though there is an increase in the quantum of loans disbursed under Agriculture and other sectors, there is a slight drop in percentage terms. Government of India has planned a credit flow of Rs.8.00 crores during 2014-15 for agricultural loans. Though there is a significant increase in the short term loans there is a decline under investment credit. This needs to be addressed immediately. He has advised the banks to guard against double reporting of data. He appreciated that the weaker section advances are above the national norm of 10%. However he has advised the banks to take care to achieve the targets in all the backward / minority concentrated districts to avoid regional imbalances. Director, DFS expressed his happiness about the establishment of RSETIs and FLCCCs by 4 Lead Banks in all their lead districts in the State. He advised that 5 RBI- Financial Literacy materials like posters, guides and diaries printed and circulated by SLBC should be used effectively by all rural branches / FLCCCs in conducting Financial Literacy Camps. He also advised the banks/LDMs to review the performance of Business Correspondents periodically and convene meetings at district level or Zonal level regularly. He appreciated the credit flow to women beneficiaries which is above the national norms. He further advised the Department of Agriculture / AIC to organise awareness camps on crop insurance in the districts. Director, DFS observed that credit flow to Micro sector is only 47% against the national norm of 60%. Performance under PMEGP is also not up to the mark and it should be addressed immediately by the member banks and all the pending applications are to be processed immediately.