BANGALORE: Union Finance Minister Mr P Chidambaram on Tuesday said southern states were doing well in credit delivery and financial inclusion.
Addressing a press conference after a meeting with south zone Chief Ministers here, he said in terms of flow of agriculture credit, education loans to students and credit to weaker sections, among others, southern states are doing better compared to some other parts of the country.
For instance, he said, there are deficiencies in northern states in this regard which the Government is trying to correct, but did not elaborate. "But in southern states, comparatively, these heads are showing good performance," Mr Chidambaram said.
The Minister had also held a meeting with North Zone Chief Ministers a few days ago.
Chief Ministers Mr Jagadish Shettar (Karnataka), Mr N Kiran Kumar Reddy (Andhra Pradesh) and Mr N Rangasamy (Puducherry) attended the deliberations, while Tamil Nadu and Kerala were represented by their Finance Ministers Mr O Panneerselvam and Mr K M Mani, respectively.
"Broadly the conclusion is that southern states are doing very well in terms of credit delivery and expansion of banking network. They are doing very well in financial inclusion," Mr Chidambaram added.
He also said that "part-answer" to the slowdown of the economy is to accelerate the flow of credit.
Mr Chidambaram said representatives from states and banks as well as top officials who took part in the interaction, were sensitised on the Electronic Benefit Transfer (EBT) which will be rolled out in 51 districts across 16 states from January 1 next year in the first phase.
All cash and subsidy are proposed to be transferred to beneficiaries under the EBT.
During the meeting, where top officials of banks and other financial institutions were brought face-to-face with Chief Ministers to address specific and systemic problems, Mr Mani urged Mr Chidambaram to push GST forward and see it’s implemented at the earliest.
Kerala’s plea was fully endorsed by the Union Finance Minister.
But Mr Chidambaram said the GST issue is before two committees set up at the last meeting of the Empowered Group of Finance Ministers.
Noting that NABARD’s refinance to the state apex cooperative institution is at 10 per cent interest, Mr Shettar urged Mr Chidambaram to facilitate long-term refinance from NABARD for medium and long term loans at par with the crop loans.
He also urged the Centre and RBI to lay down a road map for financially-sound state finance corporations to also play the role of banks so that they can get access to deposits from the public.
Mr Panneerselvam said the bulk of priority sector lending by banks in Tamil Nadu is dominated by crop loans and there are instances where jewel loans are being classified as crop loans and diverted to non-agricultural purposes.
"This is not going to improve our productivity," he said. "Therefore, efforts need to be taken by financial institutions to strengthen post-sanction monitoring mechanisms to prevent such diversions," he said.