Lending Little

Chief Minister, Omar Abdullah while underlining the need for enhancing credit flow by financial institutions, was echoing what the Valley-based business community has been clamouring since long. It i...

Chief Minister, Omar Abdullah while underlining the need for enhancing credit flow by financial institutions, was echoing what the Valley-based business community has been clamouring since long. It is unfortunate that despite all these calls, not much improvement has been seen in the flow of credit in Kashmir. And, when it comes to the priority sector lending, the position is even worse. The nationalized as well as the private banks operating in the Valley largely loathe extending credit to agriculture and industry. The banks rather remain more focused on mobilizing the deposits from Kashmir and deploying them outside. Resultantly, their credit-deposit ratio over the years has not increased in Kashmir with the pace the volume of their deposits has. No wonder then the low credit-deposit ratio in a way has resulted in the flight of capital from Kashmir. The deposits that are being mobilized from Kashmir instead of helping its economy generate wealth outside the state. The CD ratio has an important role in enhancing the investments in a place. Without having investments, we cannot have growth in different sectors of the economy. It is no secret that after starting their industrial units, what makes the Valley entrepreneurs suffer is the need for working capital, which can only be met by the generous lending of the banks. But except the state-owned J&K Bank, which has its major portion of advances in Jammu and Kashmir, all other banks fail to take up this call. Little capital in the hands of our entrepreneurs renders their products uncompetitive, while making their units sick. Same is the case of agriculture and horticulture in the state. If Kashmir has failed to bring about sophisticated infrastructure – both pre- and post-harvest — in these sectors, it is due to indifference of the banks. With chief minister now raising this issue, it is time the banks took a call and reoriented their lending policies so as to make them favourable for Kashmir. Let they extend credit in Kashmir as vigorously as they mobilize the deposits from the Valley.

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