Increase agricultural credit to meet rural India's demands: Nirmala Sitharaman to banks

Ballari (Karnataka), Oct 17 (PTI) Union Finance Minister Nirmala Sitharaman has urged rural banks to increase agricultural credit disbursement to meet the growing demand of new rural India, while reviewing the business performance of Karnataka Grameena Bank (KaGB) here.

According to an official statement, Sitharaman chaired the meeting, attended by Department of Financial Services (DFS) Secretary M Nagaraju, NABARD Chairman Shaji K V, and other senior officials from the finance ministry on Thursday.

During the review, Sitharaman assessed key indicators, including credit growth, NPAs (Non-Performing Assets), financial inclusion, and the implementation of government-sponsored schemes by KaGB.

She advised the bank to increase its share in ground-level agriculture credit disbursement, with special focus on emerging areas of the economy.

Sitharaman also directed all stakeholders to take steps to realise the potential of allied agricultural activities in the region.

“KaGB and Canara Bank should work closely with state government departments to enhance credit disbursement to the MSME and allied sectors,” the statement said.

Referring to the rationalisation of GST rates, Sitharaman said it has opened new opportunities in rural areas due to rising consumption, indicating greater funding potential for banks.

She nudged rural banks to leverage this opportunity to meet credit requirements in semi-urban and rural regions.

Highlighting the capital needs of Farmer-Producer Organisations (FPOs), Sitharaman said, “While their capital requirements are often met by development financial institutions and government departments, their working capital needs should be fulfilled by banks.” She emphasised that rural banks should upgrade products and services to suit the convenience and demand of FPOs, enabling both banks and FPOs to leverage resources for mutual benefit and sustainable rural growth.

Sitharaman further pointed out that many companies are relocating services, including data centres, from tier-1 to tier-2 and tier-3 cities, and insisted that rural banks focus on such emerging areas to strengthen their financial health.

She added that KaGB should focus on improving business operations to make the bank profitable and overcome challenges posed by stressed assets.

Sitharaman also advised KaGB and its sponsor bank to collaborate with panchayat and district-level committees to improve the screening of applications under government schemes such as PM-Vishwakarma and PMFME (Pradhan Mantri Formalisation of Micro Food Processing Enterprises).

She called on KaGB to expand its presence in the Kalyana Karnataka region by opening branches in underserved areas and to enhance operational efficiency by improving asset quality, adopting new technology, and strengthening customer service delivery, the statement said. PTI AMP SSK