[sbinews] Focus on Rural Retail Loans

  • From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Sat, 13 Dec 2003 07:00:01 +0500

Focus on retail loans in rural areas, banks told

AGENCIES[ FRIDAY, DECEMBER 12, 2003 11:12:02 PM ] 
MUMBAI: Expressing concern over credit not reaching the Kisan credit 
cardholders, RBI deputy governor Vepa Kamesam today urged banks to focus on 
extending retail lending to rural sectors and small businesses. 

“The cardholders do not have access to credit and whatever loans they get 
through the card are adjusted against their previous outstandings,” Mr Kamesam 
said at the second day of the Bank Economists’ Conference hosted by Union Bank 
of India here. 

This issue has to be addressed by all banks as there are 1.5 crore Kisan credit 
cardholders in the country facing similar problems, he added. 

Following the announcement in the mid-term review of monetary and credit 
policy, a panel for studying agriculture financing has been set up, he said, 
addressing the session on “retail lending and the challenges ahead”.  

On retail lending, Mr Kamesam said every bank is focusing on this sector and 
though it has percolated in urban areas, it has not reached the rural areas and 
small businesses in the country. 

Even with the presence of technology, credit facilities  are not reaching the 
agriculture and farm sectors, he pointed out and added that banks should look 
at various models such as the ‘e-choupals’ to enhance the credit delivery 

There is a clear need to understand the customer behaviour and choose proper 
channel to penetrate the rural and metro areas, he added. 

On internet banking, Mr Kamesam said, “I do not think how far it is good since 
one does not see the face of the customer. This channel is good but it is also 
not without risks.” 

On ATMs and sharing of networks by banks, the deputy  governor said with such 
initiatives more customers are accessing ATMs and banks have to ensure that 
adequate cash is available in the machines. ICICI Bank executive director 
Chanda Kochar said 30% of transactions are taking place through bank branches 
while alternate channels are handling the balance 70%. 

The branch culture is here to stay, however, entire rethinking has to be done 
on the role of branches, which have to be transformed to serve as sales and 
service counters, she added. 

Banks should also look at maximising use of various distribution channels for 
not only their own products but also those of other parties. 

ICICI Bank has sold more RBI savings bonds and mutual funds than the deposits 
mobilised by the bank, she added. 

Nationalised banks already have a presence in the rural areas and partnerships 
could be developed to provide better services to the customers, Ms Kochar said. 

Oriental Bank of Commerce chairman and managing director BD Narang said in 
retail lending, monitoring is going to be very important instead of pricing of 
products. The clerical staff should be empowered to take up supervisory work, 
he added. 

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