The Governor of Reserve Bank of India (RBI) YV Reddy has asked the state government to raise its credit deposit ratio to the national average of 75 per cent so that money obtained from the banks in the State could be invested in the interest of the State.
Reddy said that the credit deposit ratio in the State is 51.22 per cent, which was below the RBI minimum prescribed ratio of 60 per cent. <b1>
RBI governor said this in a meeting with the UP Chief Secretary Prashant Kumar Mishra at the RBI office in Gomti Nagar on Monday.
The Chief Secretary in turn requested the RBI governor to reduce the interest rate on agriculture loans to 4 per cent. He said that the State has 2.17 crore farmers and 90 per cent of them were marginal and small farmers, so interest rate should be brought down to 4 per cent for their benefit. He said that currently, in the State, the cooperative sector 6 per cent rate of interest was charged on agriculture loans.
Mishra, in conversation with the RBI governor, said that the average project cost under Swarnajayanti Grameen Swaraaj Yojna (SGSY) is too low and is not viable. He said that BPL families (below poverty line) should be given loans by any bank on 4 per cent of rate of interest.
The chief secretary said that all the commercial banks in the State be asked to computerize themselves as soon as possible and bring themselves under core banking system (CBS). He also asked the RBI governor that RBI should reconsider its decision where it prevents SIDBI (Small-scale Industrial Development Bank of India) from refinancing those State finance corporations that show negative growth. He said this would cause a negative impact on State finance corporations.