A growing rural India and its increasing demands require the support of rural banks to step-up agricultural credit disbursement, said Union Finance Minister, Nirmala Sitharaman, at an event in Karnataka.
In Ballari to review the business performance of Karnataka Grameena Bank (KaGB), Sitharaman chaired a meeting that was attended by M Nagaraju, Secretary, Department of Financial Services (DFS); Shaji K V, NABARD Chairman; and other senior officials from the finance ministry.
After assessing key indicators, including credit growth, NPAs (Non-Performing Assets), financial inclusion, and the implementation of government-sponsored schemes by KaGB, the Union minister instructed the bank to increase its share in ground-level agriculture credit disbursement, with special focus on emerging areas of the economy.
“KaGB and Canara Bank should work closely with state government departments to enhance credit disbursement to the MSME and allied sectors,” a statement by the finance ministry quoted Sitharaman as saying.
Directing all stakeholders to take steps to realise the potential of allied agricultural activities in the region, she said it’s important to adopt technological advancement in improving operational enhancement.
Referring to the rationalisation of GST rates last month, Sitharaman said it has opened new opportunities in rural areas due to rising consumption, thereby indicating greater funding potential for banks.
Highlighting the capital needs of Farmer-Producer Organisations (FPOs), she said, “While their capital requirements are often met by development financial institutions and government departments, their working capital needs should be fulfilled by banks.”
Rural banks should upgrade products and services to suit the convenience and demand of FPOs, enabling both banks and FPOs to leverage resources for mutual benefit and sustainable rural growth, she added.
Also Read: PPP projects on the rise: Sitharaman
Since many companies are now relocating services, including data centres, from tier-1 to tier-2 and tier-3 cities, the minister insisted that rural banks focus on such emerging areas to strengthen their financial health.
She advised KaGB to focus on improving business operations to make the bank profitable and overcome challenges posed by stressed assets and called on the bank to expand its presence in the Kalyana Karnataka region by opening branches in underserved areas.
KaGB and its sponsor bank should collaborate with panchayat and district-level committees to improve the screening of applications under government schemes such as PM-Vishwakarma and PMFME (Pradhan Mantri Formalisation of Micro Food Processing Enterprises), she further added.
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