The Hindu Business Line : SBI to tap tourism for credit growth in Sikkim

Pelling (Sikkim), March 26 A bank branch perched on a high hill, far from the busy urban centre has a loan portfolio of Rs 12 crore distributed among 600 borrowers, mostly Government employees, and total deposits of Rs 10 crore. The credit-deposit ratio thus is as high as 120 per cent.

This is the profile of State Bank of India’s branch in Pelling (Sikkim), located at an altitude of more than 6,000 ft, about 120 km from Gangtok. The manager of the bank is happy because the majority of the borrowers being government employees, the repayment is assured. The size of NPAs is as low as Rs 18 lakh and that too on account of farm lending in respect of projects sponsored by the State Government.

Most borrowers of farm loans are of the view that the money they take from the bank is for State Government-sponsored projects and therefore repayment is not important.

But then this is not the only problem facing the bank in this State. A good deal of controversy surrounds the issue of payment of income-tax. The natives of Sikkim, i.e. those domiciled in the place, are not required to pay income-tax as per the Union Government’s I-T rules; they pay State-level income-tax and therefore they have no PAN.

For the same reason, the Sikkimese taking housing loans from the bank cannot claim income-tax rebates. The banks too do not deduct tax at source for large deposits. The absence of PAN also prohibits the Sikkimese from participating in import-export trade, the issue raised at the time of opening up of the border trade with China via Nathu La but yet to be resolved, it is learnt.

There being no industrial project and hardly any major business activity in this hilly region, the corporate demand for loans is virtually absent here. The majority of the government employees take loans from the bank for building houses only to lease them out to others, mostly non-Sikkimese, to run hotels. With the number of tourists visiting this place increasing, the bank therefore is exploring opportunities in tourism.

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