Priority Lendings up by 20.5%, Bank credit grows by 21.5%

Bank Credit has grown by 1.5 per cent upto January 4, 2008 during the current Financial Year due to policy interventions, says the Economic Survey 2007-08. Concomitantly, the non-food credit by scheduled commercial banks (SCBs) as on the date under referene was well below the indicative target of 24-25 per cent growth for 2007-06. The credit deposit ratio was 71.8 per cent compared to 74 per cent on the corresponding date in 2007.

As per the Economic Survey 2007-08, the credit to the priority sectors on the last reporting Friday of November, 2007 increased by 20.5 per cent over the corresponding month of the previous year. The flow of credit to agriculture sector was Rs.1,37,760 crore (during this period of 8 months) which is about 61 per cent of the target for the year. In the micro finance sector, bank loan of Rs.20,114 crore was availed of by 30.51 lakh Self Help Groups with the average bank loan availed of per SHG being Rs. 65,924. The outreach of the SHG - bank linkage programme has enabled an estimated 427 lakh poor households to gain access to micro finance.

The Current Financial Year witnessed a spurt in Statutory Liquidity Ratio (SLR) investments of the commercial banks due to continued higher aggregate deposit mobilization coupled with lower offtake of credit. On a year to year basis as on January 4, 2008, the increase in SLR investments was Rs. 1,89,349 crore. The investment – deposit ratio as on this date was 32 per cent, the same as the last year figure.

Under the Rural Infrastructure Development Fund of NABARD, the amount sanctioned and disbursed to the State Governments as on January 11,2008 was Rs.69.883 crore and Rs.41.360 crore respectively. During 2007-08 (up to January 11, 2008), the amount sanctioned and disbursed was Rs.8,592 crore and Rs.3800 crore respectively, says the Economic Survey 2007-08.

Efforts to widen and intensify the credit delivery mechanism have continued. To ensure steady flow of credit to various segments of SSI, new instructions were given in April and July 2007. The banks have been encouraged to make available “no-frills� bank counts with “nil�or very low minimum balances making such accounts accessible to public at large. Convenor banks have been advised to initiate action for identifying at least one district in their State/Union Territory for 100 per cent financial inclusion.

Source : Press Information Bureau

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