Chief Minister, Mehbooba Mufti, today urged premier banking institutions to reach out to state’s young and budding entrepreneurs by helping them in establishing viable business units.
She said she expects Reserve Bank of India (RBI) to do more in exerting pressure on banking firms operating in the state so that small and medium enterprises have hassle-free access to loans. “We seek better cooperation of banks in creating ample opportunities of employment for youth in the state,” she observed.
The Chief Minister was speaking at a luncheon meeting today with the RBI Governor, Dr. Raghuram Rajan, during which several issues relating to banking operations in the state were discussed.
Chief Secretary, B. R. Sharma and Principal Secretary to the Chief Minister, Navin K. Chaudhary, who also holds the charge of the Finance Department, attended the meeting. From RBI side, Regional Director, RBI, Damrudhar Sethi and CGM and Executive Assistant to RBI Governor, Vivek Agarwal, participated.
Asking premier financial institutions to broaden the scope of their business operations, Mehbooba Mufti said banks need to focus on priority sector lending in the state, particularly targeting tourism, handicraft, handloom, agriculture and allied segments, which have a huge potential to generate avenues of employment for youth in J&K. She said the state’s economy needs resuscitation as it has gone through very difficult times in the past few years.
“We need to achieve RBI benchmark of 60 per cent CDR for which banking institutions have to scale up lending,” she said, asking RBI to help J&K’s efforts in creating job opportunities for our talented human resource. Dr. Rajan discussed with the Chief Minister a 12-point plan aimed at putting together a stronger financing structure in the state which goes beyond conventional banking. He said the first priority will be to create linkages of finance by overcoming physical barriers which will help in integrating the state with the rest of the country and empowering young local entrepreneurs.
“We are taking measurable short-term initiatives. I think J&K is in a better position in making the state easy for financing, which can be a model for the rest of the country to emulate,” he added.
Favouring uptick vis-à-vis lending in core sectors, Mehbooba Mufti said banks should look at social sector responsibilities as thrust areas and advance hassle-free loans to bright entrepreneurs and agriculturists. This, she observed will come as an elixir to J&K’s economy, which is showing encouraging upward trend. “The banks need to supplement the efforts of the state government in revitalizing industry and agriculture,” she said.
The Chief Minister also requested RBI Governor to expedite working out modalities for establishing banking facilities for cross-LoC trade. She said the switch from barter to banking at two trading points of Salamabad and Chakan da Bagh will expand the scope and ambit of cross-LoC commerce.
The Cabinet had recently endorsed RBI’s nod to institutionalize cross-LoC trade through proper banking mechanism by doing away with the present barter system.
The Chief Minister particularly sought RBI Governor’s support in promoting business link-ups between large business houses and local entrepreneurs, keeping in view RBI’s effective collaboration with top banking institutions. She said there is a stream of young entrepreneurs who are doing exceedingly well and need support from banking institutions in further expanding their units.
Dr. Rajan stressed on branding of handicraft products by popularizing logos and bringing tour operators, hoteliers and other stakeholders under one platform to aggressively promote J&K as a niche high-end tourist destination.
Mehbooba Mufti also requested Dr. Rajan for facilitating institutional finance for setting up model villages for basmati, apple, mint and milk. On this, the RBI Governor said once government firms up Self Help Groups and milk cooperatives, the banks will be more keen to finance liberally.
Asking banks to take a cue from HDFC’s expansion in remote and far-flung locations, Mehbooba Mufti sought Dr. Rajan’s intervention in improving the visibility of nationalized banks in un-banked areas.
The Regional Director informed the meeting that as per revised RBI guidelines every village having population in excess of 5000 will have a bank branch. He said once 121 uncovered villages which qualify are allocated to various banks by 2017, J&K hinterland will have a healthy network of banks.
To provide a window of opportunity for jobs for local youngsters in the banking sector, the Chief Minister stressed upon wider publicity to vacancies and holding of coaching classes so that more and more aspirants compete for recruitment in the banking sector.
While appreciating the concern of the Chief Minister, Regional Director said a consortium of five banks – JKB, SBI, Canara, ICICI, PNB and HDFC – will conduct coaching classes for job aspirants in Jammu, Srinagar and Ladakh to boost employability of youth in banking sector.
On the issue of 100 per cent financial inclusion by way of opening bank accounts for all citizens, the RBI Regional Director assured the meeting that the figures will be reconciled with State government and the objective of 100 per cent financial inclusion will be achieved over the next three months.
Finance Secretary drew the attention of RBI Governor towards the issue of restoration of refinance facility by SIDBI (Small Industries Development Bank of India) to J&K State Financial Corporation (SFC). He said the government has taken some measures to turn around the SFC capital base which had eroded during the turmoil in the state and its net worth had turned negative.