Banks siphon out Rs 1421 cr from Meghalaya

SHILLONG, July 25: At a time when the backward Northeastern states are crying out for more investments in order to accelerate the pace of development, commercial banks in Meghalaya siphoned out more than Rs 1421 crore from the state in one single year ending March last. The revelation was made in the meeting of the state Level Coordination Committee on Banking Affairs (SLCCBA) here today. Against the deposit of Rs 1729.25 crore mobilised by banking sector in Meghalaya during the year ending March 31 this year, only Rs 308 crore was re-invested in the state resulting in the siphoning of Rs 1421 crore to other states in the country. Inaugurating the meeting, Meghalaya Chief Minister EK Mawlong blamed the banking sector for the declining trend in the credit deposit ratio in the state which dipped to an all-time low of 17.83 per cent as on March 31 this year from 20.43 per cent in 1999. The Chief Minister observed "the constraints and difficulties highlighted by the banks in the matter of flow of bank credit in the state are being over-emphasised". He said that most banks cite the peculiar land tenure system as a major stumbling block in extending credit, though most of the loans needed for implementing various Centrally sponsored schemes as well as agricultural or crop loan do not require mortgage of land. Asking the banks to be "pro-active" the Chief Minister suggested a review of the existing arrangement. It should be possible to expand the credit flow in the priority sectors by creating a mechanism for expeditious and timely process of applications by the functionaries concerned and speedy sanction and disbursement of loans by the banks, he said. Mawlong refused to accept the stand of the banks that the problem of recovery was again a major constraint for advancing loans. "Poor recovery is often due to lack of effective post landing support and supervision this requires coordinated joint efforts by the concerned departmental functionaries and the banks on a regular basis", he said. Accusing the banks of being insincere in bringing about economic development in the state, he observed that only eight of the 17 banks represented in the SLCCBA cared to attend the crucial meeting. State Finance Minister AH Scott Lyngdoh expressed great displeasure that many of the commercial banks operating in the state have registered a CDR of less than 12 per cent as against the national average of 60 per cent. He hinted that the Government would evolve a policy under which Government deposits would be made with only those banks which show a better CDR. He regretted that the suggestions and recommendations of a sub committee set up by the state Level Bankers' Committee (SLBC) in 1996 to suggest ways and means to improve credit flow in the state have not been appropriately implemented by the banks. Finance Commissioner, PJ Bazeley was highly critical of the banks for citing the land tenure system in the state as a deterrent to flow of credit. "The land tenure system has been practised in the state for centuries. They should accept certificates issued by the District Council as proof of land ownership. If banks cannot accept it, they should fold up business in the state" he said. Before the bank representatives could present their position against the charges levelled by the state government, the newsmen present in the meeting were strangely asked to leave. This scribe later spoke to bankers to find their response in the meeting. The Assistant General Manager, State Bank of India, KN Hazarika made a forceful plea that the CDR should not be the basis of evaluating the performance of a bank. It should be based on credit plus investment minus transitory deposits and recoveries of loan, he said. He said the quantum increase in loans and advances, coverage of rural population in more dispersed benefits should also be considered while assessing the performance of the banks.