News

Union Finance Minister Nirmala Sitharaman on Friday called on rural banks to scale up credit disbursement to meet the growing demand in agriculture and allied sectors, according to a Finance Ministry statement, IANS reported.

Chairing a review meeting at Ballari to assess the Karnataka Grameena Bank’s (KaGB) performance, Sitharaman evaluated key indicators such as credit growth, non-performing assets (NPAs), financial inclusion, and the implementation of government-sponsored schemes.

The FM advised all stakeholders to tap the potential of allied agriculture activities in the region and urged KaGB and Canara Bank to collaborate with state government departments to enhance credit flow to micro, small, and medium enterprises (MSMEs) and allied sectors.

Sitharaman highlighted that the rationalisation of GST rates has created new consumption-driven opportunities in rural areas. She encouraged rural banks to capitalise on this trend to meet credit requirements in semi-urban and rural regions.

Also Read: Sustaining 8% growth important for achieving 'self-reliant by 2047' goal: Nirmala Sitharaman

She further noted that while Development Financial Institutions and government departments often meet the capital needs of Farmer-Producer Organisations (FPOs), working capital should be provided by banks. “Rural banks should upgrade their products and services according to the convenience and demand of FPOs,” she said, stressing mutual benefits for sustainable rural growth.

The finance minister also pointed to the migration of services such as data centres from tier-1 to tier-2 and tier-3 cities, urging rural banks to tap these emerging markets to strengthen their financial health.

It was recommended to KaGB that the bank focus on conducting profitable operations, managing the stressed assets, and simplifying the business processes. Besides, Sitharaman also suggested the bank to set up more outlets in the Kalyan Karnataka region, which is poorly served with banking services, and to raise the level of performance by bettering the quality of assets, embracing the new technology, and offering superior customer service.

Also Read: Indian banks performing exceptionally well: FM Nirmala Sitharaman

Sitharaman directed KaGB along with its sponsor bank to liaise with the grassroots-level committees in order to make the application screening process for the government schemes like PM-Vishwakarma and PMFME more efficient.

The Secretary of the Department of Financial Services (DFS), M. Nagaraju, announced the completion of the system and process integration after the merger. He pointed out the medium-term business plan of KaGB as a decisive factor for the bank's long-term viability and the necessity of continuous monitoring by the sponsor bank.

Nagaraju mentioned the area having the opportunities in agro-processing and MSMEs and advised engagement with NABARD to create value for the farmers. He appreciated KaGB's performance in the Atal Pension Yojana project and at the same time urged the bank to accelerates its participation in other financial inclusion schemes like PMJJBY, PMSBY, and PMJDY.

He additionally urged KaGB to partner with public sector banks in bringing financial and banking services to areas that are currently not served or are poorly served, thus making a further contribution to the cause of rural financial inclusion.