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Lend more to farmers, PM tells banks Mumbai, June 4 Speaking at the bicentennial celebrations of the State Bank of India (SBI) here, Dr Manmohan Singh said lending by financial institutions should reflect the changing face of the economy. “The sectoral deployment of credit must keep pace with changes in the structure of the economy,” he said. The Prime Minister went on to urge bank managements to focus on “organisational effectiveness” as the country’s financial system continued to grow in size. “The banking industry needs to equip itself to be able to assess and meet the credit needs of the economy,” Dr Manmohan Singh said. The Prime Minister went on to emphasise the importance of agriculture lending for growth of banks. He said Indian banks had achieved higher growth by providing loans to agriculture and related activities. He told the country’s prominent bankers that lending to hi-tech agriculture was no different from extending loans to the industrial sector. Dr Manmohan Singh, however, felt that to increase profitability Indian banks must restructure rural branches. “They may have to think in terms of restructuring rural branches so that credit will be supplemented with extension and counselling,” he said. He reiterated that India’s banks must consolidate to remain competitive internationally. The banking system, with hundreds of public, private and rural banks and tens of thousands of branches, needed to start by shaping up. “To be effective, relevant and useful...the banking system must respond to the changes in the real sector,” Dr Manmohan Singh said. “While there is no single model for consolidation, the system must consolidate itself,” he said. Finance Minister P. Chidambaram, who also addressed the gathering, promised encouraging growth of the economy. He said the United Progressive Alliance government was committed to an economic growth of 8 per cent. Mr Chidambaram said banks must boost credit to exporters with a view to giving further impetus to growth in the shipping of Indian goods overseas. India’s exports and imports are likely to touch $200 billion soon, according to Mr Chidambaram. Govt to help SBI expand Mr Chidambaram went on to state that the government would help smoothen the way for the State Bank of India to infuse new capital. The bank, which is governed by a special Act of Parliament, needs more funds to expand within the country and abroad. “I want to see the SBI logo in every capital of the world, for which it would require new capital,” Mr Chidambaram said. “It can only happen if we examine the current policies and restrictions and I hope we are able to do so in the next few months,” the Finance Minister said. He said banks must expand credit substantially to fuel economic growth targeted to grow They would need size and presence to support growing volumes, he said. Admitting that government and corporate hospitals have failed to fully address health care demands in the country, the Prime Minister said charitable institutions had immense scope in serving the nation on a par with the public sector health care bodies. “When I see success of such (charitable) hospitals, it gives me great hope,” the Prime Minister said, inaugurating the Saifee Hospital, set up by the Dawoodi Bohra community, here. Dr Manmohan Singh said the state could not bridge the health care gap alone. “It is not particularly easy when the finances are limited and there are innumerable contenders for it,” he said, adding, that in such a scenario, charitable institutions have immense scope to serve the people in the health sector. The Prime Minister clarified that he was not opposed to entry of private sector in health care. “On the contrary, in a big country like India, involvement of private sector in health care was inevitabable and desirable too,” he said. |
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