The Hindu : Business : Kalam spells out six-point mission for banks

Online edition of India's National Newspaper
Thursday, Nov 11, 2004

Business

Business

Kalam spells out six-point mission for banks

By Our Special Correspondent

— Photo: Shanker Chakravarty

The President, A.P.J. Abdul Kalam, with the Governor of the Reserve Bank of India, Y. V. Reddy, at the Bankers' Conference in New Delhi on Wednesday. The First Deputy Managing Director of International Monetary Fund, Anne O. Krueger (second from left), and the Chairman and Managing Director of Punjab National Bank, S. S. Kohli, look on. — Photo: Shanker Chakravarty

NEW DELHI, NOV. 10. The President, A. P. J. Abdul Kalam, today asked banks to play a bigger role, follow a mission-mode approach and help the country realise 7-8 per cent economic growth by doubling farm credit and devising ways to utilise the foreign exchange reserves in high yielding enterprises.

Inaugurating `BANCON,' the Bankers' Conference jointly organised by Punjab National Bank and the Indian Banks' Association, Dr. Kalam spelt out a six-point mission for banks saying that the development finance responsibility with its inherent risks was squarely and fully on the banking sector.

Universal banking

"The days of development financial institutions seem to be over. The current fashion is the Universal Bank. Even the redoubtable IDBI has converted itself into a Universal Bank shedding the robe of a pure development financial institution,'' he said urging the bankers to play a positive role to assist the country to march towards development faster.

As part of his mission, the President urged the banking sector to raise agricultural and agro-processing credit to Rs. 200,000 crores from the existing Rs. 90,000 crores over the next three years, besides facilitating infrastructure development.

He said the banks should take it upon themselves to add to the $120 billion foreign exchange reserves by investing a portion of them in relatively higher yield enterprises.

The President said the banks should be more liberal in offering educational loans, which should be extended to non-technical education as well. The bank branches should adopt schools in rural areas and meet the infrastructure needs besides promoting quality education.

His mission also envisaged banks coming forward to make provisions for 100 million quality dwelling units apart from innovatively funding three lakh sick small-scale units to enable them to adopt the latest technology and overcome the problems to becoming profitable.

Employment front

Even in meeting the challenges on the employment front, he said the banks could play a critical role.

He suggested that the banks should take a lead to create and nurture five rural development projects similar to bio-fuel project so as to create additional employment for at least 10 million youth.

He also asked the banks to allocate at least Rs. 10,000 crores for providing venture capital from the next financial year to innovative scientists and technologists working in all the three major sectors — agriculture, manufacturing and services — including information and communication technology based knowledge products and software development and software services.

Stressing that venture capital business had to increase in magnitude, particularly with hassle-free procedures, he said, "I have come across a European experience of a physics graduate turning into $100 million exclusive venture capital banker and leading to a establishment of $10 billion company."

Dr. Kalam asked the banks to provide concessional interest rate funding for creation of corporate hospitals, which could make available networked healthcare for the rural community through medical insurance on the Yeshaswini model followed by Karnataka and also attract medical tourists for cost effective treatment through the country's quality doctors.

Earlier in his welcome address, S. S. Kohli, Chairman and Managing Director of Punjab National Bank, said that Indian banks would need to pay equal attention to issues of corporate governance, technology and shifts in the regulatory paradigm in realising their global ambitions.

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