The Hindu : National : Kalam charts 7-point mission for SBI

Online edition of India's National Newspaper
Wednesday, May 31, 2006

National

National

Kalam charts 7-point mission for SBI

Special Correspondent

Inaugurates bank's Bicentennial celebrations, urges it to create a Rs. 5,000-crore venture capital fund

A MILESTONE: Finance Minister P. Chidambaram, President A.P.J. Abdul Kalam and SBI Chairman A. K. Purwar at the release of the Bicentennial Commemorative Coin on the completion of 200 years of the State Bank of India in New Delhi, on Tuesday. — Photo: V.V. Krishnan

NEW DELHI : President A.P.J. Abdul Kalam on Tuesday chalked out a seven-point action plan for the State Bank of India (SBI) while urging the country's premier bank to create a Rs. 5,000-crore venture capital fund and hike lending to the farm sector.

In his address at the SBI's Bicentennial Celebrations here, Mr. Kalam noted that within the next three years, the bank should raise the credit to the farm and agro-processing sector from 10 to 20 per cent of its total loan disbursal.

Agricultural growth, he said, was lagging behind while sectors such as manufacturing and services were showing robust increases. A higher credit disbursal, he said, was essential to hike farm growth to over four per cent as it was a vital requirement for increasing the overall Gross Domestic Product growth to 10 per cent.

Unveiling his plan, Mr. Kalam asked the SBI to allocate Rs. 5,000 crores as venture capital from 2007-08 for the purposes of funding innovative scientists and technologists for speedier societal transformation. This would include the development of ICT products, software development and software services.

The President also advised the bank to create and nurture five rural development projects, on the lines of the bio-fuel project and seaweed project, as it had the potential to provide employment to 50 lakh persons in the rural areas at the least.

Mr. Kalam also asked the SBI to adopt and innovatively fund at least one lakh sick units in the small-scale sector to infuse the latest technology and turn them into profitable ventures.

Another sector with great potential, Mr. Kalam said, was medical tourism in which the bank could extend funds at competitive interest rates for setting up corporate hospitals which would also serve the rural areas. Likewise, yet another sector for the bank's participation, he said, was infrastructure development, including provision of 50 million quality houses with basic infrastructure in rural areas in association with state and Central entities.

Turning to the plight of villagers caught in the ``vicious cycle of borrowing,'' Mr. Kalam asked the SBI to adopt a ``villager-friendly'' banking system to free them from the clutches of money-lenders.

Mr. Kalam also lamented that hassle-free loans were being extended by the SBI to students of only the best engineering colleges, medical colleges and business schools. ``I would request the SBI to examine the possibility of providing loans to students who would like to pursue science and commerce as a career," he said.

Besides, ways should be found to fund the education of those meritorious students who could not get admission to top engineering, medical and B-schools owing to stringent competition, Mr. Kalam said.

Hike lending to SMEs

Finance Minister, P. Chidambaram asked the bank to hike its lending to small and medium enterprises (SMEs), agriculture and the retail sector.

Mr Chidambaram said the share of retail lending in the country, at 10 per cent of the gross domestic product (GDP), was very modest and the bank should seize this opportunity with its vast branch network.

The SBI, he said, should also utilise its vast branch network to raise lending to the SME sector so as to help in generating employment and also addresses the issue of balanced regional development. He also asked the bank to increase advances to the farm sector further, especially the small and marginal farmers.

Globalisation, Mr Chidambaram said, was a two-way street, and went on to highlight the fact that while foreign banks and financial institutions (FIs) were eagerly waiting to enter India, the opportunity available for Indian banks and FIs to expand globally was often ignored.

"It is now internationally recognised that Indians have special skills in banking and financial services, and several Indians hold prominent positions in the financial districts in London, New York, Singapore and Hong Kong," he said.

Printer friendly page
Send this article to Friends by E-Mail