The Hindu Business Line : AP CM for differential interest rate regime

THE Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, has urged the Indian banking system to revert to the differential interest rate regime prevalent during the reign of the former Prime Minister, Ms Indira Gandhi, to strengthen the rural economy.

Addressing the 154th State Level Bankers' Committee (SLBC) meeting here on Friday, the Chief Minister said banks should be encouraged to lend to the priority sector at a lower interest rates compared to the urban lending rates. The Government should contribute subsidy to reduce the burden on the banking industry.

Advocating the need to offer significant interest subsidy to co-operative banks for crop loans and to boost discipline among the rural borrowers through interest subsidies, Dr Reddy urged the banking industry to allow more money to flow into the rural economy at cheaper interest rates.

To strengthen the rural economy, both the State and Central Governments recently decided to provide crop insurance to rural areas by considering the village as one unit under the National Agricultural Crop Insurance Scheme.

At a recent meeting in New Delhi, the Centre approved in principle a proposal to offer insurance to three districts in the State, wherein the State Government was asked to pay an additional insurance premium of Rs 50 lakh, the Chief Minister said.

Assuring the complete support of the banking community to fulfil the commitments of the Andhra Pradesh Government, the Andhra Bank Chairman and Managing Director and the SLBC Chairman, Mr T.S. Narayanasami, said SLBC had exhibited a splendid performance in increasing credit flow to agriculture in the State during kharif 2004.

The banks in the State lent Rs 12,324 crore during the period April 1 to September 30 this year to the priority sector, contributing 91.35 per cent of the September-2004 target.

The total priority sector advances in the State at the end of September stood at Rs 41,388 crore, constituting 63.59 per cent of the total advances against the stipulated RBI norm of 40 per cent, Mr Narayanasami said.

At the end of September, the total agricultural advances in the State stood at Rs 18,802 crore, contributing 28.89 per cent of the total advances against the RBI norm of 18 per cent.

The credit deposit ratio of the banks in the State was at 71.1 per cent at the end of September, against the RBI norm of 60 per cent, which is the highest in the country after Maharashtra. The ratio in the rural areas amounted to 82.56 per cent.

Urging the State Government to consider legislative changes to recognise the rights of tenant farmers and sharecroppers, a long pending demand, the Andhra Bank CMD said such a move would enable the bankers to lend further to these sections of the society.

Expressing concern over the growing incidents of fake Pattadar passbooks, he appealed to the Government to immediately look into the matter and curb such practices.

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