Nationalised banks continue to adopt miser approach in J&K

Srinagar, Jan 4: In a revealing expose of the banking sector's performance in Jammu & Kashmir, nationalised banks continue to demonstrate an unprecedented reluctance to support crucial development sectors, with some institutions achieving as low as 2% of their priority sector targets.

The stark reality emerged during the 14th UTLBC meeting held on November 12, 2024, where banking officials gathered to review the half-yearly performance. The overall credit scenario showed banks disbursing Rs.35,018.94 Crore to over 9.27 lakh beneficiaries, achieving 68% of their annual target. However, this surface-level achievement masks a troubling undercurrent in priority sector lending.

State Bank of India, the nation's banking powerhouse, managed to achieve only 19% of its priority sector targets, while Punjab National Bank followed with 22%. The situation appeared equally grim across other central banks, with Canara Bank at 21%, UCO Bank at 27%, and Central Bank of India at 32%. Punjab & Sindh Bank hit a historic low with just 2% achievement. The impact of this conservative approach is evident in the year-on-year comparison. Priority sector lending has witnessed a dramatic 18% decline, plummeting from Rs.21,795.99 Crore to Rs.17,897.69 Crore. The human cost of this decline is reflected in the 22% reduction in beneficiaries, dropping from 6.87 lakh to 5.33 lakh people during the corresponding period of last year.

Critical development sectors bear the brunt of this tight-fisted approach. Agriculture, the backbone of J&K's economy, achieved only 23% of its target. The education sector, crucial for the region's future, managed a mere 9%, while housing reached just 12%. Social Infrastructure and renewable energy sectors struggled with 2% and 4% achievement rates respectively. In a surprising contrast, these same banks exceeded their non-priority sector targets by a whopping 142%, disbursing Rs.17,121.26 Crore against a target of Rs.12,074.77 Crore. This disparity has raised eyebrows among officials and sparked concerns about banks' commitment to social development.

Adding another layer of complexity to the situation, NABARD officials highlighted significant disparities in data reporting. For FY 2023-24, banks reported Rs.12,623.53 crore disbursement to nearly 18 lakh beneficiaries on NABARD's ENSURE Portal, while only Rs.7,728.82 Crore reaching 6.69 lakh beneficiaries was reported to J&K UTLBC. This massive discrepancy has prompted calls for an investigation into reporting mechanisms.

The Chief Secretary, expressing strong displeasure during the meeting, demanded immediate corrective measures. Banks have been directed to revisit their lending policies and push credit through schemes like HADP and Investment Credit Schemes in agriculture. Private sector banks have been specifically instructed to increase their participation in government priority areas and unserved regions.

As J&K struggles with this banking crisis, the real impact is felt by small businesses, farmers, students, and countless families hoping to own homes. With major banks maintaining their conservative stance, the dream of inclusive development seems increasingly distant for many in the region.