The Kerala Government has asked the State-Level Bankers’ Committee (SLBC) to consider lending to more schemes announced in its Budget even as bankers pushed for better compliance from the State in terms of credit recovery.

The Finance Minister, Mr K. M. Mani, said in his address to the 104th meeting of the SLBC that he would request the banks to push a proposal to the Centre to revise upwards the limit of educational loans.

The Finance Minister also wanted banks to look at ways of financing the unique model of contract farming that the State Government had formulated.

Explaining, he said that the contract farming model would not involve any corporate investments but would rather see State Government-sponsored NGO such as Kudumbashree in action.

This alone would go to discount any possibility of owners of landing not getting their property back as has often happened after these have been leased to corporates.

There are tens of thousands of hectares of fallow land predominated by small holdings, which is another reason why a State-specific model had to be thought of in contract farming.

The Finance Minister also introduced to the bankers the scholarship scheme for students from the weaker sections of society and to be piloted by the Kerala State Financial Enterprise (KSFE), a State Government-sponsored chit fund scheme.

The KSFE has a turnover of Rs 12,000 crore and has 500 branches but the State Government may not be able to rustle up the resources to operate the scheme.

But there is a huge demand for educational loans, which the banks have not been able to meet. This is what prompted the Government to devise the scheme.

The Finance Minister requested the banks to consider refinance the KSFE scholarship, which is to be launched soon.

Another scheme that he put before the SLBC was the proposal for training 50,000 in soft skills and help five to 10 of them to set up small industries, as announced in the Budget.

An estimated 10,000 such small industries are to be floated, and the State Government is willing to extend interest-free loans of up to Rs 20 lakh for each. In case if a technocrat is promoting such a venture on his own, the assistance would be to the order of Rs 10 lakh.

But bigger scheme envisaging investment of Rs 1 crore and above would need finance from other sources and here is where banks could come in a big way.

He also asked banks to look at ways of enhancing the amount of educational loans by taking up the issue with the Reserve Bank and the Union Finance Ministry. The State Government shall use its good offices in this regard.

Responding to the proposals, the Canara Bank Chairman and Managing Director, Mr S. Raman, and Executive Director, Ms Archana Bhargava, assured the State Government that banks would not be found wanting to provide finance to such ingenious and result-oriented schemes as proposed by the State Finance Minister.

Canara Bank is the Convenor of SLBC, Kerala.

But borrowers must commit themselves to timely payback of the credit availed of by them, a practice that need to be cultivated by themselves.

The State Government should also think of conveying the message to them in order that banks and borrowers respect each other and help circulate money within the system to the optimal levels.

Related Topics