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NAVIGATION

Minutes of SLBC Meeting dated 07.10.2008

The meeting of SLBC (UP) to review the progress of Banks operating in the State during the first quarter of current fiscal on certain parameters, was held on 07.10.2008 at Hotel Clarks Avadh, Lucknow. Shri M. D. Mallya, Chairman & Managing Director, Bank of Baroda chaired the meeting. Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P.; Shri Sanjay Bhoosreddy, IAS, Commissioner & Secretary, Board of Revenue; Shri Manoj Kumar Singh, IAS, Commissioner, Rural Development; Shri Dheeraj Sahu, IAS, Special Secretary (Agriculture), Shri Iftakharudeen, IAS, Commissioner & Director (Industries); Shri S. N. Shukla, IAS, Secretary (Rural Development); Shri Rakesh Krishna, Addl. Director, DIF; Shri Alakh Niranjan, General Manager, Reserve Bank of India; Shri R. Satyanarayana, General Manager, NABARD; Shri Shiv Kumar, Chief General Manager, State Bank of India; Executives/Senior Officers from Banks/State Government Departments and other Financial Institutions also participated in the meeting. The list of participants is enclosed as an Annexure.

S. K. Srivastava, General Manager, Bank of Baroda & Convenor, SLBC (UP) extended a warm welcome to Shri M. D. Mallya, Chairman & Managing Director, Bank of Baroda in particular for his maiden participation and to the illustrious gathering of Senior Beaurocrates, Govt. Officials, Executives from the banks and other Financial Institutions present in the meeting in general. He also expressed his sincere thanks to Shri Anees Ansari, Agriculture Production Commissioner, Govt. of U.P. for strategic and ever available cooperation from him to improve the conditions of farming community in the state. He informed that the meeting is distinct to review the performance of banks during the 1st quarter of the fiscal. He expressed that an analysis of the data put under Agenda items would provide us an opportunity to step up the performance where needed. He further informed that :-

Banks have implemented the Agriculture Debt Waiver and Debt Relief Scheme with full sincerity and commitment within the given time frame. Loans worth Rs.8218 crores have been waived and have benefited 44.74 lacs farmers.
With implementation of ADW&DR Scheme, 2008 concerned Govt. Authorities need to support banks for recovery of their dues.
District Revenue Authorities must support and supplement the efforts of banks to recover their debts under the provisions of SARFAESI Act. because it would propogate a message also.
The response of farmers under Agriculture Debt Relief Scheme, 2008 has been sluggish. Govt. Authorities should have come forward to enthuse the deserving farmers to take advantage of the opportunity created under ADW&DR Scheme, 2008.
The concerned Govt. Authorities should proceed with a positive approach in case of the request made by SLBC for waiver of 10% recovery charges in accounts where loans have been waived by them under ADW&DR Scheme, 2008 and requisite "No Dues Certificates" have been issued.
After the incessant and turbulent rains in certain part of the state, the State Govt. has declared 32 districts as probable districts affected by flood like situation. The concerned Lead Banks in these probable districts should act according to the instructions and guideline as contained in master circular dated 01.07.2008 issued by RBI.
During last couple of years, India has turned into "Back Office" destination for global outsourcing of customer services and technical support. Simultaneously, our country has proved to be a major exporter of highly skilled workers in software, financial services and software engineering. Moreover, sectors like Manufacturing, Pharmaceuticals, Bio-technology, Nano-Technology, Communication, Aviation, Tourism and Retailing are also showing strong potential for higher growth rate. All this has culminated in higher demand for educational loans by students from rural areas. As the cost of higher and professional education has increasd many folds, these seekers of educational loans have to offer their agriculture land as mortgage to the banks. The crux of the situation is that agriculture land in U.P. is not permitted to be offered as mortgage for any purpose other than agriculture and rural housing. Hence, the bright students with rural background face serious difficulty in getting educational loans from banks. Consequently, I urge upon the State Govt. to amend the related laws so as to permit mortgage of farm land for educational loan in order to facilitate poor but bright students with rural background for getting educational loans from banks to pursue higher/ professional studies.
Looking to the volume of compilation and consolidation work of SLBC data, I feel it pertinent to request all the member banks to ensure consistency and accuracy of SLBC data and its timely submission on prescribed format to SLBC so that a realistic picture of the performance is projected.

Towards the end of his address, he expressed his thanks to all concerned for their cooperation and coordination but for the wholesome exercise of SLBC meeting could not have been possible. He requested to maintain the same in future also.

In his key note address Shri M.D. Mallya, Chairman & Managing Director, Bank of Baroda extended hearty welcome to Bureaucrats, Senior Officials of State Govt., Senior executives of RBI, NABARD and other Commercial Banks. He complemented the forum of SLBC for contributing to the development of the State under the atmosphere of mutual cooperation amongst banks, Govt. Department and other Organizations.

Deliberating upon the micro and macro developments that took place in country's economy in recent past, he apprized that:

Economy has recorded a GDP growth of +9% in last 3 years. The GDP Growth for 2008-09 fiscal is set out in the range of 8 to 8.5%.
The year old turmoil in US economy due to sub-prime crises has turned into a financial storm of historic proportions. These developments would have cascading effects throughout the globe. The domestic economy is also reeling under the pressure of on going economic slowdown across the globe. The inflation in the country has been hovering around 12% for quite some time.
Recent floods in the State of Orisa, Andhra Pradesh, Bihar and Punjab and in certain parts of Uttar Pradesh have damaged 20 lacs hectare of Kharif Crop area.
The challenges before Indian agriculture are immense and its strengthening is critical for combating rural poverty, food in security and unemployment.
There is high pressure on liquidity and financial institutions are faced with. Accordingly RBI has corrected Repo rate and CRR etc.
After appreciation in rupee value for quite some time in the past, there is a declining trend being noticed during last few days.

After this myopic account of social and economic conditions, he took up some important issues from today's agenda and commented that:

It is satisfactory to note that bank have responded well to their duties towards Priority Sector lending which is aimed at to serve the cause of under privileged and deprived section of the society.
Achievement under ACP is almost 11% because of the bare fact that Banks were busy in implementing ADW/DR scheme 2008. Now,banks should strive hard to actualize cent percent targets by next February end.
Flow of credit to priority sector has been 67245.73 crores which is almost 66.29% of the total advances portfolio of banks and well above the mandated level of 40%.
Credit dispensation to agriculture sector is almost 30% of the total advances of banks and well above the mandated level of 18%.
Finance to weaker section stands at 20.39% against the benchmark level of 10%.
DRI advances in the State are below the stipulated level and direly need sharp improvement at the earliest.
CD ratio in the State has fell down to 47.10% from Mar'08 level of 48.37%. This warrants attention at all levels and needs immediate repair action. The situation of CD ratio ranging between 20 to 40% in 31 districts of the State is quite disturbing. No excuses may be accepted and action should be initiated with a sense of commitment to reverse the situation fast.
State Govt. should upgrade infrastructure to create an atmosphere for attracting investment that would pave way for more and more credit deployment by banks.
Banks must implement Prime Minister's Employment Generation Programme and Prime Minister's 15 Point programme with revised zeal and sincerity because this would ultimately add up to the CD ratio of the State to improve.
Banks need to be complimented for having implemented Agriculture Debt Waiver and Debt Relief Scheme 2008 and accomplish the mammoth task in time. The day and night toil of the bank-men has made it possible to benefit 44,73,921 farmers to the tune of Rs. 8219 crores. These efforts of bankers have also received due recognition of Hon'ble Finance Minister.
The real purpose of Agriculture Debt Waiver and Relief Scheme 2008 would be achieved only when bankers would lend fresh finance to all eligible farmers who have been granted waiver of old outstanding debts.
To fasten the progress of social upliftment, the Govt. of India gave a challenge to banks by virtue of 100% Financial Inclusion. Accordingly, 43 districts in the State were identified by SLBC and 11 out of which have already achieved the target so far. These include Sultanpur also which is a Lead District of Bank of Baroda and has been declared as "100% Financial Included" after the last SLBC meeting. Banks must realize the goal of 100% Financial Inclusion in rest of the 32 districts at a quicker pace.
Banks should nurture the silent revolution under "Micro Credit Concept" without reservations because it is a beneficial business perspective on one side and a noble social effort on the other. Banks must utilize every potential untapped so far. As far as the efforts of banks in this direction are concerned, these may be termed as satisfactory so far as formation of Self Help Groups is concerned. Progress in respect of linking of groups with banking system leaves much to be desired. "Self Help Group" concept should be utilized to empower women and eradicate rural poverty as well.
A cursory look on the performance of banks under Govt. Sponsored Programmes indicates slow progress which is a usual phenomenon always in the first quarter. Concerned Govt. authorities are requested to sponsor adequate no. of quality applications and release subsidy well in time so that banks have to raise their performance.
Concerned State Govt. authorities should match their efforts with that of banks so far as recoveries of bank-dues are concerned. The low level of recoveries under Agriculture and Priority Sector at 54.79 and 57.31% respectively warrants sincere and reinforced efforts to increase recoveries and will force banks to maximize their credit deployment for better recycling of their available funds. The fact may not be sidelined that recovery percentage in many Govt. Sponsored programmes has decreased when compared on year-on-year basis.
Financing to weaker sections, minorities and SCs/STs call for a better coordinated efforts so that the specified levels are actualized as per the directives.
Looking to the current emphasis on MSME sector, fresh disbursement during the current year made by banks along with its classification needs a close and strict scrutiny.
Fragmentation of land holdings in the State is justifiably prompting to diversify traditional agricultural activities to Horticulture, Floriculture, Pisciculture, Sericulture etc.
The huge amount of 715.79 crores of banks locked up in Govt. Guaranteed Accounts should be released expeditiously so that it may be ploughed back to credit cycle again.
The State Govt. is requested to evolve a system of "Noting of Lien" in case Agriculture land is offered as security against bank-credit in Retail Sector as is prevalent in some neighboring States so that banks are enthused to pump more credit in this sector.
The timely recovery of bank-dues holds a paramount importance because it will automatically encourage and equipped banks to lend more.

To end up his address, Shri M.D. Mallya, Chairman & Managing Director, Bank of Baroda expressed his sincere thanks to all the participants and hope that concerted efforts would surely earn better results in future. Goals and objectives would naturally be translated into realities so that a powerful growth path is set out for the State and her populace.

Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P. welcomed Shri M.D. Mallya, Chairman & Managing Director, Bank of Baroda and thanked him for his participation in his maiden SLBC meeting. He also thanked Bank of Baroda for organizing SLBC meetings in a purposeful manner successfully. He opined that:-

Uttar Pradesh is an agrarian State and is amongst the largest food grain suppliers in the country, however, the productivity is comparatively low. Seed multiplication may be a tool to over turn the situation.
The ratio of population engaged in agriculture activities and in service sector is 27:1. This is elaborative of the fact that agriculture is the lifeline of the State
The generation and distribution of power needs to be stepped up and synchronized to make energization of installed Tube-wells a reality and provide necessary and timely irrigation facilities in rural areas. This would also open doors for more and more Agro Processing Units to be set up for value addition in Agro-products and increase employment opportunities for ruralities.
Financial systems world-over are in a state of turmoil and are casting their shadow on our economy also. Accordingly, our Central Bank has corrected the Repo rate and CRR as a measure to infuse more liquidity in the market and suitably take care of threats looming large.
The CD ratio of the State has dipped about by 2.78% and warrants attention of all concerned. Banks have to play an important role in this area.
The credit disbursement under Annual Credit Plan 2008-09 has been 4424 crore, at the close of 1st quarter. It is almost 11% of the target allocated while the benchmark level is 15%. This is an area which needs proper attention of all banks and more concerted efforts are required so that results ahead are improved considerably.
Some adverse reports about settlement of claims under RKBY specially in Bundelkhand region are pouring in. A suitable and on-the-spot relief exercise should be initiated by AIC for their proper redressal so that aggrieved farmers are satisfied well in time.
Banks should pay attention to linkage of SGSY groups so that more and more groups qualify for bank-finance and are helped to become self-reliant.
RUDSETI type vocational training institutes are required to be set up in each district of the State so that more and more educated unemployed youths are trained to take up income generation activities successfully to support them and their families. The State Govt. is all set to provide necessary land to banks to set up these institutes in all districts. Banks are requested to make best use of such an initiative.
The issue of waiver of 10% recovery charges in accounts covered under ADW&DR scheme 2008 where RCs issued earlier have been withdrawn by banks qualifies for a favorable decision and hopefully would see light of the day in due course of time.
In case of bank-funds locked-up in Govt. Guaranteed A/Cs & in Bonds / Investments in Govt. Undertakings / Corporations / Institutions , he proposed that individual meetings between the departments and the banks may be held to sort out the problems and find a suitable solution.

To end up his address, he expressed his gratefulness to the entire banking community for contributing constructively and sincerely for the cause of progress and development of the State and poverty alleviation of the poor masses. He also suggested that improving the income of the poor farmers holds the key over creation/up-gradation of infrastructure facilities.

Shri Alakh Niranjan, General Manager, Reserve Bank of India informed the house that:-

Indian Banks are safe and resilient enough to absorb the current economic turbulence that the world is facing now a days because our regulatory rules and norms are more worthy and competent.
The recent trend of devaluation of rupee would prove convenient for exporters but the recession generated in the major economies of the world would surely restrict openings for our exporters. Prospects in service sector would also be severely damaged.
Excessive rains in certain parts of the State are responsible for declaration of 32 probable districts likely to be affected by Flood situations, by the State Govt. The concerned Lead Banks should initiate steps to assess the situation and abide by the guidelines contained in RBI Master Circular dated 01.07.2008.
Debt Waiver claims under ADW&DR scheme 2008 would be settled by 30.09.2008. All grievances under the scheme should be attended to scrupulously as per guidelines and redressed suitably on its merits/demerits. Banks should extend fresh finance to those farmers who have been accommodated under the scheme so that very purpose of the scheme is fulfilled.
Branches of Banks operating in boarder districts of the state need to be more vigilant and careful in view of detection of cases of fake currency being found in circulation.
Banks should be more attentive and responsive to their customers. Banks are advised to attend all the customer complaints with extra attention that are forwarded to them by RBI.
The Asstt, Gen. Manager, Financial Inclusion, Reserve Bank of India visited 15 districts recently that were identified for 100% financial inclusion. It has been noticed during these visits that some of the Lead Banks have taken proper initiatives to actualize the goal but others have been sluggish and are lagging behind. Banks whose lead districts have not yet achieved the goal of 100% financial inclusion, need to take an extra step for accomplishment of the job at the earliest.

Mr. Dheeraj Sahu, IAS, Special Secretary, Agriculture, Govt. of U.P. informed the house that:-

The performance of commercial banks is substantially better than that of cooperative sector.

Shri Mahesh Kumar Dwivedi, Officer on Special Duty, U.P. Cooperative Bank informed the house that:-

Rs. 1661/- crore have been waived under Agriculture Debt Waiver and Debt Relief Scheme-2008 and U.P. Cooperative bank is facing liquidity crunch now.
The recovery seen after implementation of Agriculture Debt Waiver and Debt Relief Scheme-2008 has deteriorated considerably and a guarantee for Rs. 366/- crore is required from the State Govt.
Norms for issue of guarantee by the Govt. may be relaxed.

Shri R. Satyanarayanan, General Manager, NABARD informed that an amount of Rs. 363 crore has been sanctioned for co-operative sector and Rs. 270 crore for Land Development Bank. He also further added that no amount can be sanctioned without proper Govt. guarantee.

Afterwards, the Agenda items were taken up one-by-one through power point presentation.

Agenda No. 1: Confirmation of minutes of meeting dated 01.07.2008

The house confirmed the minutes of the meeting held on 01.07.2008.

Agenda No.2: Status Report on Action-Points of SLBC Meeting dated 01.07.2008

A) Exemption of 10% recovery charges in RC filed a/cs that have been "compromised" by banks under "One Time Settlement Scheme".

The issue is pending with the Govt. of U.P. for a favorable decision which is still awaited.

B) Waiver of 10% recovery charges in accounts eligible and covered under ADW&DRS-2008 and where RCs were issued earlier.

Shri Sanjay Bhoosreddy, IAS, Commissioner and Secretary, Board of Revenue, U.P. informed that the issue has been sent to the Govt. on 12.08.08 with recommendations. A policy decision is still awaited from the Govt.

2) Problem of payment of over dues of Banks in Govt. Guaranteed Accounts:

Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P. opined that individual meetings may be held between concerned Banks and the Corporations/Undertakings/Institutions to find an amicable solution of the long pending issue.

3) Non-payment of interest/principal amount in Govt. Guaranteed Bonds/Investment made by banks in bonds floated by Govt. undertakings/corporations and institutions.

Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P. opined that individual meetings may be held between concerned Banks and the Corporations/Undertakings/Institutions. Industrial Development Commissioner, Govt. of U.P. may come forward to find an amicable solution of these long pending issues.

4) Pending Margin Money claims under KVIC/KVIB Schemes:

Sri R.S. Pandey, State Director, KVIC informed the house that the cases where Margin Money claims of banks are pending have been crystallized and the matter has been referred to their central office for further course of action. Hopefully, subsidy claims in eligible cases would be settled in next 2 months.

5) Exemption of State Stamp Duty for high value agriculture projects upto Rs.10.00 crores in the state.

Shri Rakesh Krishna, Additional Director, DIF, Govt. of U.P. stated that certain data as asked for by us has not yet been submitted by banks.

Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P. opined that DIF may take up the matter with concerned authorities in the State Govt. in order to attract entrepreneurs for setting up such projects in the State.

6) Registration of Equitable Mortgage (Noting of Lien)

Shri Anees Ansari, IAS, Agriculture Production Commissioner, Govt. of U.P. desired the issue to be settled quickly.

7) Cover of U.P. Public Money Recovery Act, 1972 to SHGs (other than SGSY groups)

Shri Rakesh Krishna, Additional Director, DIF, Govt. of U.P. informed that a proposal has been received from NABARD and referred to the Govt. for an appropriate action.

8) Amendment regarding auction of agriculture land of defaulting borrowers of banks:

Sri Sanjay Bhoosreddy, IAS, Commissioner & Secretary, Board of Revenue, U.P. Govt. stated that the matter stands referred to the Govt. for the opinion.

Agenda No.3 : Review of progress under Annual Credit Plan 2008-09

The sector-wise performance under AAP 2008-09 was put up before the house.

Agenda No.4: Kisan Credit Card/Crop Loan, PAIS & RKBY