[sbinews] SBI plans Rs 11000 cr priority lending (Business Standard)

  • From: "Rajendra S. Pai" <rspai9@xxxxxxxxx>
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Tue, 15 Jun 2004 20:48:21 -0700 (PDT)

SBI plans Rs 11000 cr priority lending 
(Business Standard) 
K Ram Kumar / Mumbai June 16,2004 
State Bank of India (SBI) is betting big on priority
sector lending.  
It plans to lend Rs 11,000 crore under this head for
the current financial year compared with Rs 7,700
crore disbursed in the previous financial year.  
SBI is gung-ho about lending to the priority sector as
interest rate charged of customers ranges between
8.5-11.5 per cent. With big corporates making do
without the assistance of banks, the latter are
reeling under surplus liquidity.  
Deploying the excess liquidity in the call money
market fetches only 4.25 per cent and parking funds at
the repo window of the Reserve Bank of India earns
4.50 per cent. Faced with barely positive returns,
banks, including SBI, find lending to the priority
sector quite an attractive proposition.  
Priority sector lending currently accounts for 39 per
cent of the banking behemoth?s net bank credit of Rs
1,32,000 crore.  
If the Rs 11,000 crore lending target is achieved,
then disbursements by SBI under this category will
cross the Rs 60,000 crore mark in FY05.  
Lending to agriculture, small scale industry, small
business, transport operators, village and cottage
industries, rural artisans and other weaker sections,
education, housing etc constitutes priority sector
The target for priority sector lending for banks is
pegged at 40 per cent of their net bank credit.  
Within priority sector, SBI wants to ramp up its
lending to agriculture by a whopping 133 per cent to
Rs 2,800 crore compared with Rs 1,200 crore disbursed
in the previous year. This is in tune the Centre?s
resolve to give a leg up to the agriculture sector.  
The target for lending to the small scale industries,
pegged at Rs 1,500 crore, is a massive 131 per cent
jump over the previous year?s disbursement of Rs 650
Under the head of small businesses, the advances
target is set at Rs 1,120 crore compared with Rs 800
crore in the year-ago period.  
The bank expects to lend Rs 6,000 crore to the housing
sector this year compared with Rs 4,800 crore in the
previous year. A good chunk of this lending (advances
up to Rs 10 lakh) qualifies for treatment as priority
sector lending.  
That lending to the sector can be attractive has been
vouchsafed by A S Ganguly, chairman of RBI?s working
group of flow of credit to the SSI sector.  
He said that the slowing down of credit offtake by
large corporates due to opening up of new sources for
accessing finance and stagnation of credit demand by
retail business, makes financing the priority sector
an opportunity to expand banks? business profitably.  

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