Sunday August 15, 02:00 AM Source: Indian Express Finance
FM for more rural bank branches
By fe Bureau
Finance minister Pranab Mukherjee on Saturday asked public sector banks to open more rural branches, and hoped that banks would continue with their low interest rate regime.
He acknowledged that banks would have to constantly augment their capital base to meet the credit needs of the economy. Only 37% of the total 88,000 bank branches are in rural areas, with just 40% of the population having bank accounts, he said.
In a meeting with PSBs and financial institutions, Mukherjee said low bank penetration and high intermediation costs can constrain growth, while expressing satisfaction about the overall performance of PSBs.
When asked whether banks will raise interest rates, following RBI’s hike in policy rates, Mukherjee said: “No; I don’t think so. Banks are fully aware of it and they have taken note of it and they have adjusted their plans accordingly.” The minister, though, expressed concern about high food inflation.
Mukherjee said innovations such as the business correspondent model and mobile banking should be exploited to galvanise financial activity for the unbanked.
He also raised the agricultural lending target to Rs 3.75 lakh crore for 2010-11, up from the Rs 3.25 lakh crore target in 2009-10.
Beating the target, banks lent Rs 3.66 lakh crore in 2009-10 to agricultural sector. “This year’s target I have fixed at Rs 3.75 lakh crore and I am confident that it will cross Rs 4 lakh crore,” Mukherjee said.
