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`Time has come to look at moving onto a receivables-based model with a view to addressing the credit disbursement problem, especially in the services sector. Unless and until India can channel capital at productive rates, it would be unable to generate investment and jobs needed for growth takeoff.'

New Delhi , March 8

INADEQUATE credit to agriculture and small medium enterprises and the lack of long-term development financing will limit future growth prospects, the President of Associated Chambers of Commerce and Industry of India (Assocham), Mr M.K. Sanghi, has said in a note submitted to the Reserve Bank of India.

According to the Chamber, the RBI should take definite policy measures to reduce risk aversion of the bankers and develop a mechanism for project financing as securitisation has not yet caught on in India.

Mr Sanghipointed out that while now bank lendings were done on an asset-based model, the time has come to look at moving onto a receivables-based model with a view to addressing the credit disbursement problem, especially in the services sector.

He added that unless and until India can channel capital at productive rates, it would be unable to generate investment and jobs needed for growth takeoff. The country's rural poor are also desperate for investment in infrastructure such as all-weather roads, telecom linkages and efficient irrigation, things that would lessen their dependence on vagaries of weather.

The Assocham chief also underlined the need to introduce new risk indicators to track retail loans, especially mortgages. In view of the declining profitability and strict banking good practices norms, commercial banks have aggressively been pushing consumer loans. Even in the least risky of the consumer financing schemes, viz housing finance, the effective rate of non-performing assets were double of what was expected, and that was a cause for worry, the Chamber said.

From the point of view of commodity exchanges, the RBI has been urged to consider allowing banks to take up membership with the exchanges, which would help farmers to route their futures contracts through banks (which act as aggregators), and also consider export of gold as there is tremendous scope for India to become a gold hub in the world.

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