Public sector banks show 19 per cent growth in priority sector lending: Economic Survey

New Delhi, Mar 15 (ANI): The Economic Survey 2011-12 has underlined the fact that flow of agricultural credit has been impressive. The Indian banking system disbursed credit of Rs 4,46,779 crore to the agricultural sector as against a target of Rs 3,75,000 crore in 2010-11, thereby exceeding the target by around 19 per cent. The extension of credit has taken the total number of new farmers brought under the banking system to 127.26 lakhs.

The banking sector-both public and private-has shown impressive increase in priority sector lending during 2010-11. The flow of agricultural credit headed north, with close to 12.5 million new farmers brought under the banking system said the survey.

Union Finance Minister Pranab Mukherjee, who presented the Economic Survey 2011-12 in Lok Sabha on Thursday said capital is a key measure of bank's capacity for generating loan assets and is essential for balance sheet expansion.

"The Economic Survey says Rs 12,000 crore has been provided in the Revised Estimates 2011-12, under Plan, for capital infusion in Public Sector Banks (PSBs) to enable them to maintain a minimum Tier 1 CRAR at 8 per cent on 31March, and also to increase shareholding of the Government of India in the PSBs to 58 per cent," said Mukherjee.

The Survey highlighted that Self Help Group-bank linkage programme were being implemented by Commercial Banks, Regional Rural Banks (RRBs) and Cooperative Banks. With over 74 lakh SHGs held bank accounts with total savings of nearly Rs.7,000 crores in the year 2011 as against 69.5 lakh SHGs with savings of Rs 6,200 crores in 2010.

With initiation of computerization and adoption of core banking solutions, 98 per cent of Public Sector Bank branches are today fully computerized. The number of ATMs in 2010-11witnessed a growth of 24 per cent over the previous year.

The Survey acknowledged the fact that development of the financial sector was critically dependent on financial inclusion, which was seen as an important determinant of economic growth.

"Banks need to take into account various behavioural and motivational attributes of potential consumers for a financial inclusion strategy to succeed. Besides, access to financial products is constrained by lack of awareness, unaffordable products, high transaction costs, and products which are not customized and are of low quality.

"A major challenge in the times ahead would be to meet financing requirements, particularly of the unorganized sector and the self-employed in the micro and small business sector," added Mukherjee. (ANI)