New Delhi: The Finance Minister P Chidambaram, is expected to direct the banks to increase their efforts towards achieving the target of 15 percent priority sector lending to the minorities by 2009-10. Chidambram, who is heading a quarterly performance review meeting of 28 public sector banks, seems dissatisfied by the current effort by them towards achieving this target.
Priority lending to minorities was visualized to track and eliminate the problems faced by the minorities and make sure that they get credit without hassles. The Department of Financial Services had issued a notice in this regard in October this year but only 19 banks have took initiative and chalked out plans to achieve this goal by 2010. Setting up of a special minority cell and appointing a nodal officer were identified as key steps in this direction. State Bank of India (SBI), the largest of the lot is still lagging behind and as on 1st January, it didn't have any road map for achieving the target and no nodal officer was appointed to look exclusively into the matter, as required by the notice.
The Department of Financial Services had identified 121 minority-concentrated districts and had asked banks to open more branches at these locations to increase lending to minorities. Six banks are yet to respond to the department's query on steps being taken to open more branches in these districts and similarly five other public sector banks have yet to inform the department about the steps they have taken to increase the credit access to minorities in these districts.
The Department of Financial Services has asked the Reserve Bank of India (RBI) to open a website to display data on credit given to the minorities. Banks will have to monitor the process of loan disbursal to minorities and display their status including the reasons for rejections on this website on a quarterly basis.
Bringing more and more people into mainstream banking and providing them a hassle free banking experience has been in RBI's priority list for long and it sees as a vital component to sustain high economic growth. The financial inclusion project underway in various parts of the country is also a part of the initiative. Similarly priority lending to minorities, which have been on the sidelines of the economic growth, will help them get hassle free credit and alleviate their economic conditions.