Harsh Kumar Bhanwala was appointed chairman of the National Bank for Agriculture and Rural Development (Nabard) in December.
Harsh Kumar Bhanwala was appointed chairman of the National Bank for Agriculture and Rural Development (Nabard) in December. In an interview with Vishwanath Nair, Bhanwala speaks about his vision for the bank. Excerpts:
What key changes have you introduced at Nabard?
The last three months have essentially been dedicated to reviewing of operations and engaging with our stakeholders in development and rural banking eco-system. We have met with heads of regional rural banks and cooperative banks and general managers of commercial banks in charge of priority sector lending. Nachiket Mor and his team were also there at Nabard to discuss the committee’s recommendations. The objective is to develop a macro and realistic perspective about roles and expectations of different stakeholders from Nabard.
At a time banks are struggling to meet priority sector lending targets, have you seen renewed interest from them to work with you in rural areas?
.During the last 10 years, total agri advances have increased from R69,560 crore to R6,07,375 crore. As per RBI data, although at the aggregate level, share of credit to priority sectors was lower than the target during 2012-13, there was a rise in the growth of priority sector. The issue, however, is that the supply is not able to match the demand.
At all my meetings with industry heads in the banking sector, I have found a real need and desire to achieve their priority sector targets. With the fast-paced embedding of technology into rural banking and increasing spread of the BC model, I believe that we will see better achievement rates. Consider the idea of Joint Liability Group (JLG): 5-7 interested and likeminded borrowers come together to borrow as a group, in the process leveraging their individual financial and managerial capabilities. During the year, about 93,000 JLGs were formed and provided with credit of R841.50 crore by banks in rural areas. This is just one example.
What has been the lending growth this year?
We had set a target of R1,20,000 crore for 2013-14 and I am glad to say that we touched R1,27,000 crore. Our total outstanding loans and advances grew from R1,95,221 crore in 2012-13 to R2,23,000 crore during 2013-14, which translates into over 14%.
What are your lending targets for the year? How do you plan to achieve them?
We have set an ambitious target of R1,50,000 lakh for FY15. A bulk of this — R90,000 crore — is earmarked for refinance operations; R12,000 crore has been marked for business operations.
Any fund-raising plans in the offing?
We are India’s largest development financial institution. We essentially recycle our profits into our funds to provide concessional or grant-based support while the concessional refinance comes out of leveraging our reserves and market borrowings. We are expecting the government to provide us with options like tax-free bonds, which will help us give direction to boost the ground level credit at the field level.
What are the primary issues with rural and agricultural lending
Rural and, more specifically, agri lending has faced some major structural issues for a long time now. We have nearly 44,000 rural bank branches and some 2,82,000-odd banking correspondents today besides the nearly 90,000 primary agriculture cooperative societies. The priority sector guidelines have been modified by RBI over time to cover a wider set of activities and banks today have a huge opportunity to widen their agri lending operations. Take total agri credit scenario finance: From a mere R53,000 crore in 2000 to R6,07,000 crore in 2012-13 with a CAGR of over 24%. We have covered some distance.
The demand side statistics, however, reveal the huge chasm between expectations and actual fulfilment. Overall, we have some 13.83-crore-odd operational landholdings in the country while the cumulative number of Kisan Credit Cards issued is 10.08 crore. Let us not forget that this is the cumulative figure with the actually operative KCCs are on a much lesser side. The term lending, which, in turn, impacts capital formation in agriculture and increases its share in the national GDP has seen very limited interest from the banking sector.
Source: Financial Express
