Minutes of SLBC Meeting Dated 27.03.2008

The SLBC Meeting to review the progress of Banks operating in Uttar Pradesh as at 31st December, 07 (Financial Year 2007-08) was held on 27.03.2008 at Hotel Clarks Awadh, Lucknow. Shri S.C. Gupta, Executive Director, Bank of Baroda chaired the meeting. Shri R. K. Mittal, IAS, Agriculture Production Commissioner, Shri Shiv Singh Yadav, Director, DIF, Shri Shiv Kumar, Chief General Manager, State Bank of India, Shri Alakh Niranjan, General Manager(RPCD), Reserve Bank of India and Shri Sukhbir Singh, Chief General Manager, NABARD alongwith other Executives & Senior Officers from Banks, State Govt. Deptts. and other Financial Institution also participated in the meeting. List of participants is enclosed as "Annexure".

At the outset, Shri S.K. Srivastava, General Manager, Bank of Baroda & Convenor, SLBC(UP) extended a warm welcome to Shri S.C. Gupta, Executive Director, Bank of Baroda and Shri R. K. Mittal, Agriculture Production Commissioner, Govt. of U.P. He also welcomed the illustrious gathering of Administrators, Senior Govt. Officials, Controllers of banks and others present in the meeting. Shri Srivastava said that the review pertains to the collective performance of the banks as at the end of third quarter of the F. Y. 2007-08 as such it would provide us an opportunity to evolve strategies for future course of action. He further said that an in-depth and penetrative analysis will lead us to identify the retardants and bottlenecks that pulled back our performance and would also help us to pinpoint the potent areas.

He also apprised that :-

• The advances to Priority Sector in the State are well above the benchmark level set by Reserve Bank of India.
• Similarly, Agricultural advances of the banks in the State are also quite higher than stipulated standards.
• The achievement of banks under Annual Credit Plan 2007-08 is not satisfactory. Concerted efforts are required in this direction.
• Coverage of farmers under "PAIS" and "RKBY" is unsatisfactory compared to the number of KCCs issued. Banks should invariably cover all farmers who are issued KCCs.
• Sincere and proactive efforts are required to improve CD Ratio in the districts where it is in the bracket of 20% to 40%, to a satisfactory level.
• Recoveries against the bank dues are not upto the desired level. Concerned Revenue Authorities are requested to assist and patronize the banks in this regard.
• Almost -1347315- RCs involving an amount of Rs.2243.86 crore of banks' funds are pending. He urged upon the Revenue Authorities to extend their fullest support to the banks to enthuse them for lending more.
• Private and New Generation Banks should ensure submission of timely and accurate data to SLBC in future.
• All banks other than the lead bank operating in the district should extend all possible and strategic assistance to the concerned lead bank to enable it to achieve the goal of "100% Financial Inclusion" of the district within the stipulated period.
• As a matter of principle, State Govt. should park the developmental funds received from the Central Govt. in a pool account opened in a district level branch of the concerned lead bank.

Lastly, he expressed his thanks to the participants for attending the meeting in large number and hoped that meaningful discussions/deliberations would take place.

Delivering his key-note address, Shri S.C. Gupta, Executive Director, Bank of Baroda and the Chairperson of the meeting extended a warm welcome to Shri R. K. Mittal, IAS, Agriculture Production Commissioner, Govt. of U.P., Senior Bankers and Senior Officials of the State. Acknowledging the continuous contribution of the office of Agriculture Production Commissioner, Govt. of U.P. to the forum of SLBC, he expressed that the presence of Shri Mittal was also a continuation of this convention. He also welcomed other dignitaries present. He added that SLBC is an appropriate forum where both bankers and govt. functionaries can identify the areas where they can supplement each other to achieve the best results. He also added that :-

• Bank should expedite disbursement in all sanctioned but pending cases so that the achievements in the days to come are not only satisfying but near to the targeted level.

He also referred to some of the recent micro-developments that took place in the economy of the country and apprised that :-

• Budget announcement related to the banking industry does call for doubling of outlay for accelerated irrigation, waiver of loans, higher agriculture credit and development of water bodies. Emphasis on micro-irrigation will help in increasing yield, quality of produce and effective utilization of inputs like seeds and fertilizers.
• The impact of proposal to waive loans would help banks to improve their asset quality because a sizeable chunk of it makes a part of their provisioning requirements. With more money in the hands of individuals, banks could benefit from higher deposit growth. Also higher growth in agriculture credit, double digit growth for manufacturing sector and excise duty cut in automobiles could boost over all credit growth.
• 8 to 9% GDP growth in the country for almost last 2 years is encouraging and banks should intensify their lending programme for poor and weaker sections of the society so that they may also have their share in the developments. A timely, proper and hassle free finance is all that is required to make it happen.
• Every rural branch has to open 250 new accounts per year.
• To help the banks in their holistic programme for "100% Financial Inclusion", NABARD would create two funds namely "Promotion and Development Fund" and "Financial Inclusion Technology Fund" . Similarly, State Govt. should also create a public fund to compensate banks for their efforts to achieve the goal of "100% Financial Inclusion" to bring poor and deprived ones in the main stream of the society.

He also cited the example of Rajasthan (BOB is Convenor of SLBC) where the State Govt. has offered to bear the entire infrastructure cost to help achieve 100% Financial Inclusion. They have also provided in their budget programme for this purpose. He appreciated it as a bold step in right direction and hoped that his mother state of U.P. will surely come out with the same gesture.

Further, he informed that the programme of 100% Financial Inclusion in the state of Rajasthan will be completed in 3 stages. In the first stage Smart Cards will be issued by banks and all infrastructure related costs attached to it till its issuance will be borne by the State Govt. The State Govt. has also provided for Rs.850 crores in their budget and intends to bring almost 50 lacs BPL families under the fold of 100% Financial Inclusion. In the 2nd stage "Bank Correspondent Model" will be introduced and the Govt. will share part of the transaction here also.

Though modalities are still being worked out, it is good to see that Govt. of Rajasthan has all intentions to come up with certain initiatives. He expressed his belief that Uttar Pradesh is a strong state and is competent and capable enough to introduce even better ideas.

He continued that 100% Financial Inclusion is not opening "No Frill Account" only. It was necessary that State Govt. should extend financial support to banks to defray the infrastructure cost because it has to be toned up in a big way to meet out this big challenge.

Thereafter he touched upon the agenda items and informed as under :-

• Banks collectively have financed Rs.11908 crore, Rs.2668 crores and Rs.3440 crores under agriculture, small enterprises and services sector respectively. These are almost 52, 57 and 51 per cent respectively of the allocated targets. Though there is a partial dip in the performance, it is in line with the national trend. It was also slower than the credit growth in the past year.
• All the controllers of lead banks in the district where CD Ratio is within the bracket of 20 to 40% should ensure that sharper focus is applied so that it is satisfactorily improved. Simultaneously, State Govt. should also extend helping hand by way of upgrading the infrastructure in these districts more specially in some of the eastern districts which are the major contributor to this list.
• Commercial and Regional Rural Banks collectively and Cooperative Banks individually have achieved 50% and 90% of their allocated targets respectively under Kisan Credit Card Scheme. Better and more spirited efforts are required in this segment.
• Credit flow to SME sector is to be doubled upto 31.03.2010 in comparison to its level in 2004-05, hence banks have to continue with their sincere efforts to accomplish the task. State Govt. should also extend support by way of development of infrastructure to provide a progressive and nurturing environment for industries to grow and prosper. This will facilitate banks to enlarge their credit flow to industrial sector through eligible entrepreneurs.
• As has been referred in the budget 2008-09, banks are required to maximize their credit flow to minority community specially in 21 districts in the state identified with concentration of SC/ST and minority communities.
• All the lead banks in the state should strive hard to keep up the commitment for achieving 100% Financial Inclusion in all the identified 41 districts in time. Rampur, the lead district of Bank of Baroda, has also been saturated was informed by him. He appealed to banks other than the lead banks in the state to assist and cooperate lead banks so that they may succeed in actualizing the goal of 100% Financial Inclusion as per the commitment because it is a real Herculean social service that may not be delivered individually by any single agency involved in the exercise and all have to work in tandem.
• Due to declaration of drought in 9 districts in Bundelkhand and Vindhya regions in the state, banks would have to postpone recovery of their overdue principal for a period of three years and reschedule its recovery in 10 years including three years period of postponement. Moreover, banks have to come up with "Debt Swap Scheme" to redeem the debts of farmers taken from private moneylenders at a high cost. Alongwith these steps taken by banks as relief measures, banks would also be required to withdraw their recovery certificates as such State Govt. should exempt 10% recovery charges on all RCs withdrawn by the bank instead of only RCs involving and amount less than Rs.1.00 lac which is in vogue.
• The issue of overdue amount of investments made by banks in bonds/Govt. guaranteed accounts of corporations/undertakings of State Govt. should be resolved with commitment and positive frame of mind because it involves the credibility of the government. When the State Govt. is determined to upgrade the infrastructure in the state and banks are keen to join hands, Govt. should certainly settle the issue specially in case of PICUP and UPFC bonds to help banks remove all doubts and hesitation.
• Lots of RCs of banks have already been pending and recovery against them is quite low. Govt. orders not to adopt coercive measures for recovery in case of RCs less than Rs.1.00 lac have adversely affected the recovery scene. Off late, orders have been issued that the minimum of 3.125 acres of agriculture land should be essentially left with the farmer if auction of his land for recovery of bank dues is exercised. This will create further a gloomy atmosphere for the banks as far as their recoveries are concerned. Simultaneously, the finance for purchase of tractors would be slowed down because banks are in practice of financing a group of co-borrowers to meet out the statutory pre-qualification of minimum of 4 acres of land holding because 70 to 80% of the farmers in the state belong to the category of small and marginal farmers with scant land holding. In view of the above, the condition of minimum of 3.125 acres of land holding as essential in case of auction of land of farmer against his bank dues should be scrapped totally or might be converted from individual to collective basis so that banks are not averse of group financing for purchase of tractors because of the minimum land requirement clause.
• Recoveries are not commensurate with the credit extended by the banks in the state. Banks are caretaker of the public money and have to safeguard the interest of their creditors, the public in general. State Govt. should ensure recovery of their dues in time to boost their moral and enthuse them for credit deployment.

Lastly, he thanked one and all for their participation in the meeting and opined that the meeting would surely achieve its purpose.

It was informed to the house that Shri Nand Gopal Gupta 'Nandi', the Hon'ble Minister, Institutional Finance, Stamps and Registration, U. P. Govt. who had very kindly consented to participate in today's meeting, could not attend because of some unavoidable circumstances. He has sent his kind good wishes for the success of the meeting.

In his address, Shri R. K. Mittal, IAS, Agriculture Production Commissioner, Govt. of U.P. welcomed Shri S.C. Gupta, Executive Director, Bank of Baroda. He said that :-

• It is a great opportunity and privilege to attend this meeting which is not only very important for the development of the state but for the growth of the agriculture sector which happens to be a key sector and his main concern.
• Credit is a very important input related with progress and growth. Although many factors combine to complete the process, availability of timely credit is the first and the foremost. Many others like quality of inputs and its availability as per requirement are some, which complete the chain. After all these, vagaries of weather play an important role. As the last recourse, insurance cover, which is presently at a quite lower level, is extended as a back-up support in case of losses. All these factors are assuming greater and greater importance every day. In view of the decreasing contribution of Agriculture sector to the economy of the country, Central as well as the State Govts. are very much concerned about the tardy progress of Agriculture. As the pressure on land is increasing on account of change of its use from Agriculture purpose to non-agriculture purpose, it is very much important that what so ever land is available to us must be used to the optimum.
• It is good that the corporate sector is focusing on rural sector because they visualize it as a good market avenue, which can add to their growth and profits. This relationship and inter-dependence is good to see. In this backdrop, the banking fraternity must look it as good business preposition and should patronize poor farmers with timely and liberal credit.
• In the context of CD ratio, points that have been raised by Sri Gupta Ji are very genuine and the Govt. is also very open to these. We are aware that banks do not create money and they have to recycle it. Unless the cycle goes on freely, it may not continue successfully. The State Govt. realizes it in a right perspective.
• As far as initiatives taken by the neighbouring State Rajasthan are concerned, we assure that the state govt. is very alive to the welfare of poor class of our society and is determined to extend every support though our State is not only very huge in area but its population is also very large.
• Bundelkhand and Vindhya Regions of our State are facing severe drought conditions. Many a relief measures have already been taken. Recently the Cabinet Secretary held a meeting with senior bank officials wherein he made an appeal to them to extend a supporting hand to the Government to take up the challenge.
• State Govt. is well versed with all these problems and is trying its level best to take them all in a sporting manner. Some of our programmes are very good such as NAREGA. Our achievements in NAREGA scheme have been rated second after Andhra Pradesh in the entire country.
• State Govt. and the banks are complementary to each other and this is a stark realty. Bankers should understand Government's view and Government should also consider bankers' problem. Unless we complement each other, the State can't make much of a progress. The forum of SLBC is a right plate-form for sharing and coordinating each other. Preferably a small group, which may consist of Secretary (Agriculture) as one of its members, may be formed to meet from time to time.
• The contribution of Banks in the progress of the State is very strategic and important specially in the present circumstances. Banks may not be viewed as a lender only, they have to make many more contributions to the society. Scholarship distribution is such one more thing, which is a massive work for banks and they have been contributing though there are some teething problems yet they are being sorted out. This initiative of banks has been widely appreciated.
• I am a very open person and I will always welcome any suggestion or discussion for a betterment. Any one of you may meet me in person or may telephone me any time.

Towards the end of his address Shri Mittal, Agriculture Production Commissioner, Govt. of U.P. thanked Shri S.C. Gupta, Executive Director Bank of Baroda who came all the way from Mumbai to attend this meeting and also complimented Sri Gupta for his concern about the State.

Sri Alakh Niranjan, General Manager(RPCD), Reserve Bank of India stated that:-

• RBI has made sincere efforts for the purpose of achieving 100% Financial Inclusion which includes sensitizing the banks for taking care of banking and financial needs of the public at large. In the 1st phase Balia was identified which now stands as saturated. Baghpat and Meerut identified later on have also been saturated now. Recently Ghaziabad has also achieved the status of Financially Included. Today, Rampur, the Lead District of Bank of Baroda has been declared as "Financially Included". 14 Districts having concentration of SCs/STs and Minorities were identified for 100% Financial Inclusion and 26 districts more were also agreed to be financially included during the SLBC meeting dated 10.10.07 at the instance of Hon'ble Minister of state for Finance, Govt. of India. -1- more district was identified in the SLBC meeting held on 26.12.07. Hence, total 41 districts are to be financially included. RBI has set up a financial inclusion cell at Lucknow to give impetus to financial inclusion and financial literacy. As per the reports received, good work has been done in some of the districts like Mathura, J P Nagar, Moradabad, Pratapgarh, Auriya, Deoria, Etawah, while progress in some districts like Jhansi, Muzaffarnagar, Bijnor and Saharanpur(Lead Bank PNB), Balrampur and Hamirpur (Lead Bank Allahabad Bank), Siddharthnagar (Lead Bank SBI) and Hathras (Lead Bank Canara Bank) is not encouraging.All Lead Banks should ensure that the target of 100% Financial Inclusion is achieved in their lead districts at the earliest. State Govt. should surely come up with substantive plans for the banks as an acknowledgement of their contribution in this social cause.
• CD Ratio of the State has fallen down to 47.7%, 1.41% below the level in last quarter. One more district namely Jhansi has added up to the list of districts having CD ratio between 20 to 40%. This has raised the number to 31 though the special sub-committee of DCCs have already been formed in districts with lower than 40% CD Ratio and the position is being regularly monitored. It is noticeable that Eastern districts of the state make most of this list. Banks are prepared for credit expansion through desiring and deserving borrowers if a sincere and conducive environment is created in this part of the State. For the purpose some serious planning and efforts are to be made both by banks and the Govt. as well.
• Recovery of dues of Investments made by banks in the Bonds of State Govt. undertakings under a Govt. guarantee is a cause of concern. A time bound action plan for repayment of this locked up money of banks is necessary. A delay any more would certainly jeopardize interest of both banks as well as the State Govt. because banks would feel discouraged to make an investment any more in the State Govt. undertakings.
• The operation of "Lead Bank Scheme" and the role of "State Level Bankers' Committee" is being reviewed by high-power committee constituted by RBI. The objective behind the move is to make both the schemes more purposeful.
• The Regional Director, Reserve Bank of India along with Senior Officers from some of the Banks paid a visit to Bundelkhand for making an on the spot assessment of the situation prevailing there. A note for this visit has been forwarded to the Agriculture Production Commissioner, Govt. of U.P. and the Convenor of SLBC for information and necessary action.

Thereafter, Sri Sukhbir Singh, General Manager, NABARD appraised that:-

• During the approval of XI th Plan Approach Paper, the Hon'ble Prime Minister observed that Agriculture must be at the center of planning and it has been envisaged therein that Poverty Ratio should also be reduced by 15% upto 2012. Emphasis has also been laid down on "Inclusive Growth" and "Financial Inclusion". NABARD has been entrusted with the responsibility of coordinating with various Rural Financial Institutions for the purpose of "100% Financial Inclusion".
• Two funds i.e. 1. Financial Inclusion Fund, 2. Financial Inclusion Technology Fund with Rs. 500 Crore each have been constituted by NABARD and modalities are being finalized with a view to develop a mechanism/different processes so that "Financial Inclusion" in the State might be fastened. Financial Inclusion has assumed greater importance for banks now and as soon as these two funds become operational, sufficient financial assistance and technological up-gradation will be available to the banking sector and the whole process of financial inclusion will be accelerated.
• Banks have disbursed Rs. 18016/- crore upto Dec'07 under ACP 2007-08 against the stipulated annual target of Rs. 34246/- crore. Achievement in agriculture sector has been Rs.11908/- crore which was slightly higher than that in the last year. Banks have done a good job and I am confident that banks would certainly actualize the annual targets at the end of the day.
• 2008-09 will be a crucial year because a target of Rs. 275,00,000 crore has been set for the agriculture sector by the Central Govt. and banks would be required to excel in their performance to a great extant. Banks need to develop their own strategies and structures to generate business in rural areas specially in non-farm sector. For this, banks would have to strengthen their "Product Marketing Mechanism". In fact the time has come when we can't just sit in the branches and wait for the customers to come to us. On the contrary, it was time to move out, reach the customers and market our different products before him to choose. The commercial banks have to emulate new generation banks/foreign banks in their marketing strategies.In this regard, it is important to know that there is a huge gap between information and knowledge of the rural masses. It has to be addressed appropriately and sensibly by the commercial banks. They might tap immense business in rural areas. Though some of the commercial banks have already started their efforts in this direction, many more were to copy. There were many business prepositions that might be utilized.
• The loan waiver by banks would surely entail massive credit demand and banks should be ready and prepared for it.
• The National Food Security Mission set up by Govt. of India demands for an additional production of 8 million tons of Wheat, 10 million tons of Rice and 2 million tons of Pulses in 138, 133 & 168 districts identified in whole of the country. The Agriculture production has remained stagnant for quite some time. Banks have to extend full-fledged support to this important and extensive programme.
• The seed production in India was also another area which caught attention of the policy makers. There was a dearth of quality seeds and other planting materials in our country and in our state also. To support the National Food Security Programme, it was necessary that banks should take it as a challenge and their efforts were combined as a campaign. Some of the villages in particular areas should be developed as Seed Banks and must receive focussed attention of banks.
• NABARD has sanctioned this year almost 1100 crore of rupees to the State Govt. from RIDF for projects of irrigation, flood protection, work shades and rural roads etc. Rs.550 crores have already been disbursed which was all time high. This would create infrastructure and potential as well particularly in the areas of irrigation and flood protection and creation of more and more cultivable land. Banks should assist by way of crop loans and other agriculture loans so that the huge amount spent for creation of infrastructure was utilized purposefully. .
• NABARD has sanctioned credit limits of Rs.672 crores to Cooperative banks and Rs.594 crores to RRBs in whole of the state, which is also ever highest. Principal Secretary, Cooperative, has lodged a claim of Rs.551 crores as per the recommendations of Vaidyanathan Committee Govt. of U.P. It was under consideration and would be released soon. This would help cooperative sector in the state to contribute in a better way for the cause of Financial Inclusion in the state.

Thereafter, agenda-points were placed before the house through Power Point Presentation.

Agenda No. 1 : Confirmation of Minutes of SLBC Meeting Dt. 26.12.2007.

The house confirmed the minutes of the meeting held on 26.12.2007.

Agenda No. 2: Status Report on Action- Points of SLBC Meeting Dt.26.12.2007

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

The representative of Revenue Board informed the house that administrative expenses for recoveries against RC filed cases comes out almost 13% as such It might not be waived. However, in cases where repayment has been rescheduled by the banks due to natural calamity, 10% recovery charges have been waived.

Shri R. K. Mittal, Agriculture Production Commissioner, added that when he was a Commissioner, the issue was discussed in several meetings and it was concluded that a policy decision in this regard should be taken. He opined that some practical changes were required to be made and he would like it to be pursued by DIF.

Recovery of Bank's dues under pending Recovery Certificates of less than Rs.1/- lac :

It was informed by Allahabad Bank that in Unnao district, RCs below Rs.1.00 lac were not being accepted by the Revenue Deptt.

The representative of Revenue Deptt. replied that it was made clear in the last SLBC meeting that all the Collectors have been duly informed by communiqué or meetings. No RC is being denied by Revenue Authorities. However, it has been recently decided by the Govt. that all RCs pending for more than three years should be returned for reconciliation because there existed a vast difference in number of RCs that were shown as pending.

Submission of 8 to 10 representative cases of pending RCs from each district having sizeable amount :

It was apprised by the representative of Board of Revenue that no coercive measures were being adopted for recovery in cases of RCs below Rs.1.00 lac but recoveries have not been stopped in these cases and the progress was also being reviewed separately. It was further added that information about representative cases have been received from 65 districts of the state and the Collectors were reviewing the progress in their districts and the department also conducts monthly review. They have recovered an amount of Rs.400 crores in cases where RCs have been issued for more than Rs.1.00 lac.

It was brought to the notice of the house that DIF has confirmed that 8 to 10 representative cases have been submitted by all the 70 districts in the state.

Representative of Board of Revenue reaffirmed that these lists have been received from only 65 districts of the state. Such lists in case of 5 districts i.e. Bijnor, J. P. Nagar, Ghaziabad, St. Ravidas Nagar and Gautam Budh Nagar were yet to be received by them. He further intimated that letters to these districts have also been written and they would review the progress in these districts also as and when the required lists are received.

Problem of payment of over dues of Banks in Govt. Guaranteed Accounts.

It was apprised to the house that Industrial Development Commissioner, Govt. of U.P. shall be initiating necessary action for a speedy settlement of the issue.

Delayed/Non-payment of principal and interest against the investment made by banks in bonds floated by Govt. undertakings/corporations and institutions.

It was informed that the issue was pending with Industrial Development Commissioner, Govt. of U.P. It was instructed by Agriculture Production Commissioner, Govt. of U.P. in the pre-SLBC meeting dated 25.03.08 that the issue should be amicably resolved at the earliest. DIF should arrange an early meeting.

Nodal Deptt. should release subsidy in all the old pending Margin Money claims pertaining to KVIC/KVIB Schemes :

Shri R. S. Pandey, State Director, KVIC informed the house that a meeting was held on 14.12.07 at Divisional Offices of KVIC/KVIB at Gorakhpur and Varanasi wherein LDMs or their representatives of only 9 lead districts participated in the meeting, LDMs of Ambedkar Nagar, Mirzapur, Allahabad and Pratapgarh did not report. The certificates submitted by the LDMs of Jaunpur, Varanasi, Chandauli, St. Ravidas Nagar and Ghazipur contained cases more than reported earlier as pending.

Representative from Canara Bank pointed out that in the districts of Mau, Meerut and Baghpat, more than 33 cases were pending for release of subsidy. These are not the cases that pertain to brick kilns. A list has already been handed over to KVIC. The representative of KVIC informed that the cases of pending subsidy in the districts of Mau, Meerut and Baghpat relate to projects other than Rice Mills. He further added that these cases would also be resolved. The list submitted by Canara Bank has been forwarded to Divisional Office, Meerut. However, a fresh copy may be submitted again.

In case of eastern districts where the problem was more acute, LDMs should meet the Divisional Director, KVIC so that a final settlement might be reached. If it is done by 15.04.08, an amicable settlement would be reached soon.

Constitution of Special Sub-Committees (SSCs) of DLCC having Credit Deposit Ratio less than 40% :

It was informed to the house that there are -31- districts having CD Ratio below 40% and the Special Sub-Committees of DLCCs have been constituted at all these district headquarters for monitoring the CD Ratio. As the CD Ratio of these districts is being reviewed separately under agenda item no.5 on regular basis, the house accepted the suggestion to drop the issue from the list of pending action points.

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

It was informed to the house that the issue was also put up in the pre-SLBC meeting dated 25.03.08 before Agriculture Production Commissioner, Govt. of U.P. and deliberated, who suggested that the matter should be forwarded with recommendation to the appropriate authority in the Govt.

Registration of Equitable Mortgage

The issue was discussed in last SLBC meeting also and it was informed that a system is already in place in states like Madhya Pradesh, Tamilnadu, Andhra Pradesh, Gujrat and Karnataka.

Shri S. C. Gupta, Executive Director, Bank of Baroda opined that the matter should be considered by the State Govt. with a serious approach because retail loans conform as a focus area for banks. Certain cases of frauds by virtue of bogus title deeds of properties or seeking multiple finance against the same property from the banks by fraudulent persons have been reported. The evolution of such a system in the state would prove to be a good mitigating and encouraging factor for the banks to tackle such problems.

The representative of DIF apprised the house that the matter has already been taken up by them. However, there is no check for anybody to go for registration of anything and even equitable mortgage may be got registered.

As the factor of cost is attached to this demand and a loss in exchequer may not be acceptable to the State govt. as such exemption/reduction in the cost of registration may not be approved at the Govt. level. and the Stamp Deptt. of State would have to decide whether they can afford to loose out of their budgetary provisions. This is the center of the problem.

Shri S. C. Gupta, Executive Director, Bank of Baroda opined that the house should pass a resolution that the State Govt. must come up with a serious, constructive and favourable decision in this regard so that fraudulent activities of seeking finance from banks against bogus title deeds or multiple financing against the same property may be checked. He also appealed that such types of crimes should be reckoned as a crime against the state, not against the bank.

State should not visualize the issue from the angle of small revenue loss but it should be evaluated from the point of view of safety of public money. State should reciprocate surely to encourage banks so that they can associate themselves well with the development of the state. The house endorsed the views of Shri Gupta.

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

Additional Director, DIF was requested to apprise the house on the subject matter and he informed that SGSY was very well covered under U. P. Public Money (Recovery of Dues) Act. 1972 As regards SHGs formed by NABARD are concerned, the loans for agriculture and allied activities to these SHGs are covered beyond doubt under U. P. Agriculture Credit Act, 1973.

Shri Sukhbir Singh, Chief General Manager, NABARD commented that non-agricultural loan upto Rs.25000 are only covered.

Shri Rakesh Krishna, Addl. Director, DIF supplemented and said that all schemes under which refinance from NABARD is available, are invariably covered under U. P. Agriculture Credit Act, 1973.

Shri Sukhbir Singh, CGM, NABARD opined that refinance is available from NABARD against all types of finances which are granted by banks to SHGs.

Shri Rakesh Krishna, Addl. Director summed up the matter with his observation that the loans granted to SHGs (other than SGSY) are covered under U. P. Agriculture Credit Act, 1973.

Shri S. C. Gupta, Executive Director, Bank of Baroda wanted a crystal clear clarification on this issue so that all doubts in this regard are removed and banks are clear and content.

Agenda No. 3: Review of progress under ACP 07-08 as at Dec. 2007 :

The progress upto Dec.07 was put up before the house.

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

The progress upto Dec.07 was put up before the house.

Agenda No. 5: Credit Deposit Ratio :

The progress upto Dec.07 was put up before the house.

Agenda No. 6: Recovery under Priority Sector, RC Filed A/cs NPA A/cs & Govt. Sponsored Schemes :

The progress upto Dec.07 was put up before the house.

Agenda No. 7 : Golden Jubilee Rural Housing Scheme

The progress upto Dec.07 was put up before the house.

Agenda No. 8(A) : Swaranjayanti Gram Swarojgar yojana (SGSY)

The progress upto Dec.07 was put up before the house.

The representative from Rural Development Deptt., Govt. of U.P. stated that :-

• Financial target for the F. Y. 2008-09 is Rs.676 crores.
• Disbursement under the scheme is low.
• Zero performance branches should be sensitized and motivated so that performance under the scheme was improved and some areas were not deprived of the bank finance.
• Interest rates, which were being charged, should be universal and identical.
• The applications received by the branches of the banks should be disposed off as per stage-wise schedule prescribed under the scheme.

The representative of Rural Development Deptt., Govt. of U.P. was requested to send a copy of the targets fixed for the entire state under the scheme for financial year 2007-08. It was further informed that :-

• Whenever a list of zero performance branches is received, it is always forwarded to the controllers of the banks from time to time for information and suitable action.
• All member banks have also been advised suitably on the issue of interest.

Shri Dinesh Sharma, Chairman, Baroda Eastern U.P. Gramin Bank apprised that:-

• Recovery under SGSY scheme was around 50%.
• Recovery in case of SHGs formed by NGO is 70% to 80% and more.
• It should be analyzed why recovery under SGSY was low whereas the recovery in case of SHGs of NABARD was satisfactory and higher.
• Line Department should make concerted efforts to improve recovery under SGSY so that banks could lend more and more under the scheme.

Agenda No. 8(B): Swaran Jayanti Shahari Rojgar Yojna (SJSRY)

The progress upto Dec.07 was put up before the house.

The representative from SUDA requested that :-

• Applications received should either be sanctioned or returned with the reason responsible for its rejection.
• It is an important scheme and is presently within the focus of the State Govt.

The nodal deptt. was advised not to sponsor bulk applications towards the end of the financial year. Instead, applications should be sponsored on a regular basis in a phased manner.

Agenda No. 8(C) : Prime Minister's Rojgar Yojana (PMRY)

The progress upto Dec.07 was put up before the house.

The representative from MSME, Kanpur requested that :-

• The banks should finance to the eligible applicants to the tune of Rs.5.00 lacs as per the revised guidelines.
• Credit expansion under the scheme should be maximized.

Shri S. C. Gupta, Executive Director, Bank of Baroda requested all controllers of the banks present to ensure compliance in this regard.

Agenda No. 8(D): Saghan Mini Dairy Pariyojana (SMDP)

The progress upto Dec.07 was put up before the house.

Dr. Mohan Swaroop, General Manager, SMDP stated as under :-

• The progress of banks under the scheme was satisfactory. Even disbursement in 610 old pending cases has also been made.
• The recovery under the scheme was one of the best amongst all Govt. Sponsored schemes.
• The scheme was under the focus of the State Govt. and it has been extended to all the 70 districts of the state w.e.f. 01.04.08 where as it was applicable to only 40 districts previously.
• Banks should also finance to eligible cases out of 600 cases pending for 2nd dose of finance.
• Finance should be extended to eligible cases in Dugdha Samiti Grams where cent percent marketing links were available.
• This programme has been chosen for employment generation in Ambedkar Gram Sabha Villages, which were being identified by the State Govt.
• Dr. Ambedkar Samagra Gramin Vikas Programme also includes this scheme hence banks should accept the scheme on priority.
• The scheme was designed for a unit of two milch cattle in the past. Dugdha Vikas Deptt. has submitted a very big project for "Milch Cattle Induction" from next financial year. One part of this project pertaining SC/ST community has been approved and the other part was yet to be cleared.
• The Deptt. has conducted a study in the states of Punjab and Hariyana so as to ascertain the positive points of the scheme of dairy farming in these states. We might be able to identify the negative points prevalent in our scheme so that it might be improved further and recovery was better.

Agenda No. 8(E): Special Component Plan (SCP)

The progress upto Dec.07 was put up before the house.

The representative of the nodal deptt. stated that 46000 applications were pending as of Feb.08 and these should be disposed off on merits.

Agenda No. 8(F): KVIC/KVIB Schemes :

The progress upto Dec.07 was put up before the house.

Shri R. S. Pandey, State Director, KVIC apprised as under :-

• Ratio of sanctions to applications received was quite low and only 162 cases have been sanctioned against 1337 sponsored by the deptt.
• The nodal deptt. has sanctioned Rs.4.00 crores as margin money.
• The banks should ensure to submit a certificate to the nodal deptt. latest by 15.04.08 that there was no pending subsidy claims other than already submitted.

Shri S. C. Gupta, Executive Director, Bank of Baroda commented there after that the issue of pending subsidy claims of banks under the scheme was quite old and should be resolved soon to a logical end. Banks should unfailingly submit the required certificate to the nodal deptt. latest by 15.04.08 so that the issue was settled once for all.

Agenda No.8(G), 8(H), & 8(I) : Margin Money Scheme for Minorities/Backward Class/ Scheme for Liberation & Rehabilitation of Scavengers :

The progress upto Dec.07 was put up before the house.

The representative from the nodal deptt. of SLRS scheme cited as :-

• The new scheme for self-employment of manual scavengers has already been sent to all banks through DIF.
• Banks should involve themselves with the scheme with vigour and commitment.

Shri S. C. Gupta, Executive Director, Bank of Baroda, appealed to the bankers that there should be zero pendency under the scheme at the close of the financial year. As the scheme was quite old and important with the most holistic objective, banks should proactively associate themselves with the scheme.

Agenda No. 9: Swarojgar Credit Card (SCC)

The progress upto Dec.07 was put up before the house.

Shri Sukhbir Singh, Chief General Manager, NABARD apprised that :-

• The scheme was formulated to provide hassle free and timely credit to artisans, handloom weavers, fishermen, rickshaw pullers and other self employed persons alike.
• Achievement was quite low and need to be raised on a campaign basis.
• RRBs are contributing well but the performance of cooperative sector is not upto the mark.
• A composite loan upto Rs.25000 per borrower was admissible, which included Term Loan and Revolving Cash Credit Limit. However, higher loan may be granted in deserving cases.
• Banks should sponsor the scheme on priority basis because it was under the focus of Central Govt.

Shri Rakesh Krishna, Addl, Director, DIF apprised the house that the State Govt. was also keenly interested in issuance of SSCs in urban areas on large scale.

Agenda No. 10: Submission of LBR 2 & 3 Returns :

The progress upto Dec.07 was put up before the house and it was requested to NABARD to deliberate on the issue.

Shri Sukhbir Singh, Chief General Manager, NABARD stated as under :-

• Some confusion is prevailing about the SAMIS reporting system.
• A revised model was worked out by NABARD and sent to RBI. It was also expected that the prevailing reporting system would continue in some of the districts. Later on it was opined that banks should evolve a new methodology.
• As per the latest situation, banks are required to report as per the existing format unless new formats are prescribed and introduced in lieu thereof.
• At the moment the submission of data under the prevalent SAMIS reporting system is quite low.

Agenda No. 11: Self Help Groups :

The progress upto Dec.07 was put up before the house,

Shri Sukhbir Singh, Chief General Manager, NABARD stated as under :-

• All SB linked groups should also be credit linked.
• Per group/per capita credit consumption is low enough and it should be maximized. Sufficient and required credit should be made available to the groups at the time of the project finance of all SHGs so that they can generate sufficient income and the members become self-supported and self reliant.

Agenda No. 12: (A) For Setting up Agri-clinics and Agri-business Centres for Agriculture Graduates.

The progress upto Dec.07 was put up before the house.

Shri Sukhbir Singh, Chief General Manager, NABARD stated as under :-

• It is a Govt. of India scheme formulated with an aim that agriculture graduates will fill in the gaps of extension services in rural areas where the services of concerned Govt. Deptts. have been found inadequate and lacking.
• A two months training is also imparted to agriculture graduates by training institute at Hyderabad or its state/district level units so that they may be well equipped.
• Though a good number of agriculture graduates have been trained, very few of them have been extended bank finance. Most of them have been credit linked for working capital requirements only and the units have been established mostly for input supplies only i.e. Fertilizers, seeds and pesticides etc. Service units such as "Soil Testing Units" and units to provide "Agricultural Implements on Hire/Rent are negligible.
• Credit deployment by banks to "Investment Credit Segment" is scant. There is a need for banks to intensify their finance in this area.
• Subsidy @25% for the capital expenditure is available under the scheme.

Agenda No. 12: (B) Capital Investment Subsidy Scheme for Construction/Renovation/Expansion of Rural Godowns.

The progress upto Dec.07 was put up before the house.

Shri Sukhbir Singh, Chief General Manager, NABARD stated that the scheme is aimed at extension of storage capacity/facility in rural areas and was extended upto 31st March 08.

Agenda No. 12: (C) Venture Capital & Project Development Assistance Scheme of SFAC.

The progress upto Dec.07 was put up before the house.

The representative from Agriculture Deptt. informed the house that one proposal from Mathura was pending and was under consideration.

Agenda No. 12: (D) National Horticulture Board (NHB) Scheme

The Progress of banks as at Dec., 07 was put up and noted by the house.

Agenda No.13: Advances to Micro, Small & Medium Enterprises :

The progress of banks as at Dec.,07 was put up before the house.

Director, MSME, Kanpur said that banks should vigorously promote the "Credit Linked Subsidy Scheme" of Govt. of India.

Add. Director, DIF pointed out that the progress under CGFTSI scheme is not satisfactory.

The Representative from SIDBI apprised the house that 10225 units in the state are covered for Rs.155.46 crores. A very good number of cases are yet to be covered under the scheme.

Progress under Artisan Credit Card Scheme :-

Addl. Director, DIF suggested that banks should pay more attention to this scheme.

Agenda No. 14: Financial Assistance to Minority Communities :

The progress of the banks as at Dec.07 was put up before the house.

Agenda No. 15: Financial Inclusion :

The progress as at Dec., 2007 was presented before the house.

Shri S. C. Gupta, Executive Director, Bank of Baroda cited the example of Rajasthan and stated that :-

• The State Govt. of Rajasthan has taken up the task of Financial Inclusion in the most unconventional way.
• As per Rajasthan model, only issuance of Smart Card is not all but many other features such as health insurance etc. also make part of "Financial Inclusion". This Smart Card might be used for many things such as payment of pension and under NAREGA scheme etc.

Addl. Director, DIF opined that the Smart Card would not only serve the purpose of banks but would help the State Govt. also to achieve so many things.

CGM, NABARD also apprised the house as under :-

• Financial Inclusion is not just opening of No Frill A/cs. It is only one thing that can facilitate rural masses with banking services/transactions. The 2nd most important aspect attach to the programme of Financial Inclusion is an object of institutionalizing the credit extension in rural areas. Meager credit needs of the ruralites must be satisfied and they should be allowed easy access to banks and other formal financial sources.
• Banks should also develop their own mechanism and methodology for increasing "Financial Literacy and Financial Education" in rural areas.

The General Manager, Punjab National Bank informed that a scheme of granting ab-initio credit facility upto Rs.2000 in No Frill A/cs. has been implemented by their bank.

Agenda No.16: Crime against Banks :

Update position upto Dec.07 in this regard was put up and representative of Police Deptt. was requested to apprise the house about the latest position in the case of theft attempt made in Ballia branch of Ballia Kshetriya Gramin Bank.

The representative from Police Deptt. informed :-

• No progress has yet been made in the case of theft attempt made in the Ballia branch of Ballia Kshetriya Gramin Bank.
• As far as the case of absconding Head Cashier of Mahoba branch of Central Bank of India is concerned the exercise of confiscation of the property of the culprit has been initiated.

Agenda No. 17: Any other issue with the permission of chair -

Centre Sector Scheme - Venture Capital Fund for Dairy & Poultry.

The scheme was implemented in 2004-05 in the whole country and is likely to continue during the 11th Five Year Plan. The progress under the scheme is to be reviewed in SLBC meetings. SLBC has requested NABARD, Mumbai to advise the lines on which progress is to be reviewed so that progress may be reviewed accordingly.

Amendments in extant provisions by Govt. of U.P. in respect of auction of Agricultural land of defaulting borrowers of banks.

The concerned Govt. Authorities were requested to reconsider the recent changes that minimum of 3.125 acres of land should essentially remain with every defaulting borrower whose agriculture land is being auctioned for recovery of bank dues. It was suggested that the condition of minimum of 3.125 acre of land holding on individual basis should be scrapped or converted to collective basis. Thus, the restriction recently imposed shall not prove as a deterrent for banks to group-finance a tractor in view of statutory compulsion of pre-qualification of minimum of 4 acres of agriculture land. Moreover land holdings in Uttar Pradesh are generally very small and any such restriction shall refrain the banks from further financing to this sector, thus hampering the growth of Investment Credit.

-9- districts of Bundelkhand and Vindhya regions of the state declared as "Drought affected" : Relief Measures as suggested by Task Force.

All the action points as communicated by RBI vide their letter No.LKO.R.P.C.D./3657/08.13.701/2007-08 dated 13.02.2008, have already been communicated by SLBC vide their letter No.UP&UZ/34/SLBC/93 dated 15.02.2008 for compliance.

Banks were requested to comply with the instructions in word and spirit and also submit the required information to RBI immediately, if not submitted as yet.

The meeting ended with a vote of thanks proposed by Shri Ravi Kumar, Zonal Manager & Dy. General Manager, Bank of India.

ACTION POINTS : SLBC Meeting Dated 27.03.2008

PARTICIPATION SHEET SLBC (UP) MEETING DT. 27.03.2008