Financial stress in the banking sector was visible in Gujarat, where the non-performing assets (NPAs) of the Micro, Small and Medium Enterprises (MSME) and agriculture sectors rose sharply during the first quarter of the current fiscal.

After the latest State Level Bankers' Committee meeting on Monday, a report stated that the agriculture NPAs for April-June 2019 quarter in the State saw steep rise of about 48 per cent to Rs 6326 crore as against RS 4270 crore reported in the same quarter last year.

Notable is the fact that the agriculture term loan, which is used by the farmers to meet their long-term investment credit requirement for specific farm activities, jumped 53 per cent on year-on-year basis to Rs 4272 crore for the quarter under review as against Rs 2792 crore in the corresponding quarter last year. The agri term loans marginally gone up to Rs 38312 crore, up from Rs 36,468 crore last year. But the NPA percentage-to-outstanding for the agri term loans jumped to 11.15 per cent from 7.66 per cent reported last year.

However, explaining the stress conditions, SLBC convenor and Executive Director, Bank of Baroda, Vikramaditya Singh Khichi stated that the weakness in the farm sector was primarily due to drought-conditions last year. "This year with better monsoon and good crop situation we believe this stress will ease out."

But the impact of overall economic slowdown was visible on the micro-small and medium enterprises (MSME), where the NPA situation worsened. Of the total outstanding of Rs 1,04,882 crore for MSMEs reported as on June 2018, gross NPAs stood at Rs 7290 crore (6.95% of outstanding). But as on June 2019, the gross NPAs increased to Rs 8974 crore with total outstanding of Rs 1,26,663 crore, which works out at 7 per cent NPAs of outstanding.

For the state as a whole, gross advances of the banks in the State stood at Rs 6,05,879 crore, up about 11 per cent, while the gross NPAs stood at Rs 39,695 crore, up 6 per cent. The NPA percentage to outstanding for the quarter under review stood at 6.55 per cent, which is a tad lower than 6.84 per cent reported in the same quarter last year.

The 162nd SLBC meeting was chaired by Chief Minister VIjay Rupani in presence of deputy Chief Minister Nitin Patel, RBI Deputy Governor M K Jain, P S Jayakumar, MD & CEO Bank of Baroda among others.

The Chief Minister stressed the credit needs of MSME sector as 34 lakh MSME units are operational in the State. Also, RBI Deputy governor, urged NABARD to extend funds from RIDF in the districts having credit/deposit ratio below 40 per cent by setting up infrastructural projects in these districts. There are seven such districts mostly from the tribal belt of the State.

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