Priority Sector: Private Banks asked to ramp up lending in J&K

Srinagar, Jan 9: In a call for financial reform, the Jammu & Kashmir Union Territory Level Bankers' Committee (UTLBC) has directed new-generation private sector banks to revitalise their lending strategies, placing a strong emphasis on priority sectors beyond agriculture and Micro, Small, and Medium Enterprises (MSMEs).

During the 14th UTLBC meeting held on November 12, officials announced a striking 10% increase in total deposits, soaring from Rs 1,71,383 crore in September 2023 to Rs 1,88,566 crore in September 2024. Advances also rose by 9%, climbing from Rs. 1,10,692 crore to Rs. 1,20,413 crore in the same period. However, a slight dip in the Credit-Deposit (CD) ratio, which fell by 0.73%, reveals a pressing need for banks to enhance their lending capabilities in the region.

Currently, a staggering 82% of bank credit is funnelled into agriculture and MSMEs, while other critical sectors—such as education, housing, social infrastructure, and renewable energy—remain out of focus. This narrow lending strategy has raised alarms among stakeholders who believe that a broader distribution of credit could significantly contribute to overall economic development in the union territory.

To address this disparity, UTLBC has mandated that all member banks ensure at least 40% of their total outstanding advances are allocated to priority sectors. The message is clear: banks must diversify their portfolios and provide vital support to underrepresented areas, helping to create a more balanced and resilient economy.

“New generation private sector banks are uniquely positioned to expand their reach,” stated a government official. “We expect them to step up and take on a larger role in funding education, housing, social infrastructure, and renewable energy projects that can transform the region.”

As Jammu & Kashmir continues to evolve, this renewed focus on equitable lending presents a golden opportunity for banks to not only fulfill regulatory requirements but also to contribute to the socio-economic upliftment of the Union Territory.