Narayanasamy says rising NPA due to priority given to high-value clientele

Chief Minister V. Narayanasamy has called for a change in the attitude of banks focusing on supposedly high-value clients at the expense of small traders and farmers.

Addressing a meeting of the State-level Bankers Committee hosted by the lead bank, Indian Bank, Mr. Narayanasamy urged the banks to adopt a more liberal approach to sanctioning loans for the MSME and farm sectors, which generally maintain a credible repayment record.

According to him, one of the primary reasons why several banks were neck-deep in non-performing assets (NPAs) was because of the practice of focusing more on high-value clientele and industry majors.

Mr. Narayanasamy pointed out that even the Government of India had enunciated a policy of encouraging, through various schemes, small businesses and farmers besides self-employment of women and youth.

Banking support for farmers was all the more crucial in a resource-strapped place such as Puducherry, where ryots had to devise their own irrigating sources from groundwater and procure agricultural inputs including fertilizers. While the government was providing various subsidies for procuring seeds and fertilizers besides market intervention mechanisms, the banks need to adopt matching supportive measures, Mr. Narayanasamy said.

Organic farming was picking up in a big way in rural Puducherry, Karaikal and a part of Yanam and several private investors were keen on technology infusion and expanding the network. “We need the full support of banks in boosting the organic farming sector,” Mr. Narayanasamy said.

Neglected sector

Turning to the Micro, Small and Medium Enterprises (MSMEs), the Chief Minister felt that this sector had for far too long been neglected by financial institutions. Especially post-GST, many MSME units were struggling to compete, a fact he had highlighted in a recent letter to the Finance Minister, he said.

Pointing out that apart from their employment potential, MSMEs accounted for 25% of the country’s aggregate exports, Mr. Narayanasamy appealed to banks to adopt special focus on this sector.

Women Self Help Groups was another category which was not getting required support from banks, the Chief Minister said. At present, banks were following a “pick-and-choose” policy of providing loans to applicants. This has to be replaced with a more uniform standard of loan disbursal, especially as most of the SHGs had an excellent repayment record, Mr. Narayanasamy said.

In response to the Chief Minister’s request, bank representatives attending the SLBC consented to focus more on enabling credit facilities for women SHGs and to organise a loan mela for the segment shortly.

Apart from V. Candavelou, Finance Secretary, those who participated included Anjana Dube, Deputy Director General, Ministry of Finance, M.K. Bhattacharya, SLBC chairman of the UT, , Padma Ragunathan, CGM, NABARD Regional Office, Chennai, J. Sujatha, DGM, RBI, Chennai, D. Devraj, general manager, Indian Bank, B. Veeraraghavan, SLBC convenor, and J. Balakrishnan, Indian Overseas Bank, Puducherry.

Small trade booming

An estimated 1,700 small trade outlets, primarily restaurants, have set up shop in Puducherry in the last two years, Chief Minister V. Narayanasamy revealed.

Citing an independent survey, Mr. Narayanasamy said this was reflective of the tourism potential of the place.

He urged banks to take cognisance of this boom in small trade segment and increase financial support to this sector.