The Hindu : Front Page : Priority sector credit to minorities will go up

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Thursday, Aug 02, 2007
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Priority sector credit to minorities will go up

Special Correspondent

The goal is to take it from 9 to 15 per cent in three years

State-owned banks agree to open more branches
RBI asks banks to provide fair share of loans to minorities

NEW DELHI: The Centre on Wednesday directed the public sector banks to increase advances to minority communities, including Muslims, Christians and Sikhs, to 15 per cent of their total priority sector lending over the next three years.

Briefing newspersons after a meeting with chairmen of the public sector banks here, Finance Minister P. Chidambaram said: “The lending to minority communities has reached about nine per cent out of the total lending to the priority sector. The goal is to take it to 15 per cent in three years and banks will move in that direction.”

With the respective lead banks taking the initiative, the state-owned banks have also agreed to open more branches in minority-concentrated districts to cater better for the needs of the people. Under the priority sector lending programme, the banks are mandated to extend 40 per cent of their total advances to borrowers in sectors such as agriculture and small and medium enterprises, and to socially and economically weaker sections. To help uplift their lot, the Centre earlier identified 103 districts, where 25 per cent or more of the population were Muslims, Christians, Sikhs, Buddhists and Zoroastrians.

A majority of these minority-concentrated districts are in West Bengal, Uttar Pradesh, Bihar, Assam, Andhra Pradesh, Maharashtra and Kerala.

The exercise was undertaken on the recommendations of the Sachar Committee, which highlighted the poor social, economic and educational conditions of these sections.

One such initiative under the Prime Minister’s 15-point programme is priority lending by banks.

Lending to the minority communities as on March 31 this year amounted to nearly Rs. 51,000 crore, which works out to about nine per cent of the net priority sector advances by the public sector banks at Rs. 14,41,335 crore.

In May, the Reserve Bank of India issued a master circular, directing the banks to provide a fair share of the loans to the minorities out of the credit earmarked for the weaker sections.

Mr. Chidambaram said the banks would have to implement the Government’s decision already taken in this regard.

Lending to the minorities would not, however, include loans advanced in minority-concentrated states.

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