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State Asks More Credit Flow

Bhubaneswar: While appreciating the efforts of the Banks for increasing their portfolio in the MSME Sector, the State Government has urged the Banks to pump in more funds to this area, which is showing signs of growth.

Principal Secretary Finance Vishal Dev while taking stock of bank credit flow in various sectors remarked that “Credit flow to MSME sector has shown a rising trend with more than 100 Percent achievement in the last three years“.

He also observed that achievement against target under MSME credit was 103.31 per cent in 2021-22. The Credit Projection for MSME sector has been enhanced by around 20 per cent to Rs. 72297.90 crore in 2023-24 over previous year.

It is heartening to note that the ground level credit flow for the priority sector is showing a rising trend over the past 5 years. The performance of all banks together was 93.06 PC of the target set in Annual Credit Plan for 2021-22, which was 88.39 PC in the previous year, pointed out Principal Secretary Finance.

Mr.Dev said that one of the major challenges in expanding Micro credit to SHGs in the State is the low average credit support by banks to SHGs and there is an urgent need to double the credit quantum at every level, especially for 2 nd and 3 rd dose onwards.

At present, the average loan size of SHGs in Odisha is Rs.2.70 lakh as on September 30, 2022 whereas, it is around Rs.2.93 lakh for the country as a whole. All Banks, LDMs and DDMs have to give top priority to this sector and achieve the set target.

The achievement against the target under agricultural credit was 95 PC in 2021-22. The achievement of Commercial Banks in total agricultural credit was 102.77pc in FY 2021-22 with respect to their allotted targets, whereas the achievement of Cooperative Banks and RRBs were 91.60 pc and 57.53 pc respectively.

Under the Crop loan, the share of Cooperative banks was 102.26pc. Commercial Banks achieved only 69.63 PC of the allotted crop loan target.

Accordingly he urged all the Commercial banks in the State to increase their portfolio of crop loans.

The Agri-term loan disbursement in 2021-22 was 37.95pc of the total Agricultural credit in the year compared to 31.15 pc in 2020-21. In agri-term loans, the share of commercial banks was 75pc whereas the share of Cooperative Banks was only 6.1pc.

Co-operative banks thus need to increase credit disbursement under Agri-term loan, advised Principal Secretary Finance.

There is a need to deliberate and prepare a strategy to enhance the credit flow to the agriculture sector rapidly and proactively. Banks need to evolve a suitable framework for extending credit for long term development of the agriculture sector, pointed out Mr.Dev.

He was happy that the CD ratio of State has been improved to 76.85pc as on September 30 2022. The CD ratio of both the RRBs in the State is still less than 50pcC. All Banks are advised to achieve a CD Ratio of 60PC in respect of their rural and semi-urban branches separately. The banks should ensure that wide disparity in the ratios between different Districts is avoided in order to minimise regional imbalance in credit deployment, said Mr.Dev.

However, the credit dispensation in certain districts is very low, as a result of various factors such as lack of necessary infrastructure, varying ability of different regions to absorb credit, etc. Banks may review the performance of their bank branches in such areas and take necessary steps to augment the credit flow, asked Principal Secretary