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Importance of Improving Credit Deficit Ratio

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Mridula Sinha
Principal Secretary, Department of Institutional Finance
and Programme Implementation, Government of
Jharkhand

“Banks’ reach are much higher in Jharkhand now than what it was five year ago,” says Mridula Sinha. In conversation with Kartik Sharma & Souvik Goswami

Please give us an overview of your department’s work.
This department basically coordinates social finance programmes. We coordinate all the activities that come under social finance including nationalized banks,private banks or non-banking sectors. The main objectives of the department are to review and monitor the credit flow in the Jharkhand region by the commercial banks, regional rural banks and other financial institutions, especially in the rural areas and, to act as a nodal agency for coordination between development departments or district administrations of Jharkhand state and financial institutions. The department has three wings, viz. Institutional Finance, Project Cell and Programme Implementation, popularly known as Twenty-Point Programme Cell. It has also been the endeavor of the department to annually enhance the State Credit Plan and achievement to accelerate the growth of the economy.

What are the challenges in the social finance sector in the state of Jharkhand?
The challenges are not that tangible even though Jharkhand is a credit deficit state. So, we have always been giving importance to improve credit deficit ratio; because the problem is credit worthiness which is not very high. Even if citizens want, they cannot take loans, and there are lots of constraints. We are trying to improve the situation by coordinating with various banks.

What steps have been taken to overcome these challenges?
One has to keep in mind that improvement in the credit sector has to be handled in a professional way. We cannot say that just go and distribute money. Basically people have to come forward and come with a feasible plan, so that bankers also are able to do good business and people who take loans can take advantage of that. Loan as such does not mean anything if it is not used properly. We have taken number of steps to improve the situation.

Please elaborate on these steps.
We want to strengthen the district-level committees and have asked district-level bankers to be more active. We have advised them to organize more and more credit camps in the rural areas and emphasis is on priority sectors.

A Pariyojana Sangathan Prabhag:

• To identify viable projects in the state, particularly centrally sponsored schemes, centrally assisted schemes, externally aided schemes etc.
• To prepare and get prepared project profile, investment study and feasibility reports, to undertake techno-economic appraisal of project on behalf of state government & any other organization.
• To identify sources of fund for project financing from Central Government, Aid-India Consortium, World Bank, Asian Development Bank etc., and
• To undertake publication of reports, pamphlets, booklets etc. This wing also arranges and monitors loans from different All India Financial Institutions for the state government.

Rural Credit Wing:

The Rural Credit Wing engages in preparation of State Annual Credit plan, particularly in rural areas and it’s monitoring in association with State Level Bankers Committee. The stress is on increasing the flow of ground level credit in priority sectors with emphasis on agriculture and allied sectors and also to coordinate with all the other banks such as RBI, NABARD and SLBC in finding solution to the grievances of the farmers for which a Kissan Help Desk has been set up at Ranchi and the plan is to have one Kissan Help Desk each in all the Districts.

20-Point Programme:

This Programme was announced in 1975 and later revised in 1986 and 2006 for the upliftment of the poor in rural areas. Due to economic & social importance of the 20-Point Programme, a separate Programme Implementation Department was created which is amalgamated with Institutional Finance Department. Duties & Responsibilities include implementation of the 20-Point Programme, target fixation under 20 point, formulation and administrative control of the 20-Point Programme, District/Block-level publicity, and extension work thereof.

So, what is your take on financial inclusion?
Financial inclusion is an interesting thing. It is picking up as Self-Help Groups (SHGs). They are really doing a great job in the state of Jharkhand. Not only they are taking loans, but also repaying them well. So, definitely, if loan is given to the correct entity, it comes back and is good for the entire credit system. Loan is just an activity in the larger scheme of things. What I mean to say is that better industrialization, better investments and better marketing of the state is needed to be there in place and it will help in improving credit worthiness of people.

How do you think banks can increase their reach in the rural areas of Jharkhand?
Banks are also keen to expand. All the schemes are bank-related. Most of the payments are done through banks. So reach of the banks is increasing and is much higher than it was five years ago. It is on a constant path of improvement, and I am very much positive towards this.

What kind of ICT initiatives are being undertaken by your department?
Basically we don’t have much ICT initiatives as ours is mainly a coordinating department. But banks are into computerization and most of the payments are made online. So, in that context anything which is done through net banking helps us. They have their own software and coordination with various programmes in which money is going through the bank account. So, whichever the nodal department is, like MGNAREGA, Anganwadis, etc., wherever the department is paying money, they have to come to understanding that it gets linked more with bank accounts.

Please tell us about your vision for the department.
My department should be in a position to coordinate better so that a facilitating environment is created.

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