The state government has decided not to keep public money in 14 private and commercial banks, which have got poor rankings in terms of credit-deposit ratio, disbursement of loans in priority sector, agricultural loans and Kisan Credit Cards.
The banks that have got the censure from the government include United Bank of India, Indian Bank, Oriental Bank of Commerce, UCO Bank, Indian Overseas Bank, Axis bank, ICICI Bank, Andhra Bank, Bank of Maharashtra, Dena Bank, Punjab and Sind Bank, Vijaya Bank, State Bank of Bikaner & Jaipur and Land Development Bank.
Deputy chief minister Sushil Kumar Modi said that the government had come up with four criteria to rate the performance of nationalised and private banks having public deposits, and blacklisted 14 of them, which fared poorly with scores of less than 25 points. The minimum required for a pass percentage was 33 points.
For the first time, such a step has been taken to rate the banks on their performance so that the credit-deposit (C-D) ratio and loan disbursements in priority and farm sectors can improve. Banks which have performed well will be geting incentives and more public funds in deposits,said Modi.
Modi was talking to reporters on the sidelines of the Janata Durbar at his 1, Polo Road residence.
The deputy chief minister, however, said the government would be issuing a notification soon to keep public funds in some of the private banks, which have fared well on the four parameters.
In the ranking chart, HDFC and IndusInd Bank have scored around 80 points while commercial banks like State Bank of India (SBI), Union Bank of India, Canara Bank, Punjab National Bank and Bank of Baroda scored in between 35 and 65 points.
“The performance of the financial institutions was assessed following an agreement with the state-level bankers' committee for reviewing their lending performance in respect of the four criteria of the state government with effect from April 2012,” he said.
Incidentally, Modi, who also holds the finance portfolio, has been consistently pursuing the issue of credit-deposit ratio (the amount of money disbursed against deposits by banks) with bankers over the past seven years.
He warned them of withdrawing government funds from their institutions if they failed to improve their performance.
The meagre loan disbursement in the farm sector and against KCC has been a big worry for the state government, which has been putting pressure on this sector for higher agricultural production.
Repeated follow-ups and pressure on the financial institutions to lend more has seen the annual credit plan rising substantially over the past few years even though bankers say they are wary of lending more in the farm sector due to the high rate of bad loans and nonperforming assets (NPAs).
The deputy chief minister, however, termed it as a lame excuse by banks. “A good share of credit flowing in the state is being provided by non-banking financial institutions, which easily manage to recover their money. Then how is that only the banks face bad loans and NPAs?” asked Modi.