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Corporate banks overshadow state’s banks
Staff Reporter Dimapur, Nov 29(NPN):
Published on 30 Nov. 2009 12:29 AM IST
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Though the state owned Nagaland Rural Bank is starved off cash mainly because government funds of various departments are kept in corporate nationalised banks; the ‘poor man’s bank’ (rural bank) is expected to perform a daunting task of spreading its wings throughout the state. As per the norms banks those having high deposits are expected to lend or advance at least 50 to 60 percent of the amount. The corporate nationalized banks which have cornered most of the government funds in the form of deposits in the state instead, advance hardly 10 percent of their deposits. The remaining around 90 percent of the money is transferred outside for investments. On the other hand, the state rural bank has been advancing around 34% and the percentage continues to rise while also being asked to spread its reach to almost all rural areas in the state. On the other hand, most of the corporate banks have hardly two offices in the state, being located mostly in Kohima or Dimapur. Though the SBI is the lead bank , in terms of lending percentage for priority sectors, it is below the rural bank though in terms of amount the SBI is far above the rest. In other states of the north east, the respective state governments have effectively patronized the state rural banks. The governments of Meghalaya and Mizoram have ensured their banks get due share of deposits so as to enable these banks advance at least 40% for priority sectors. Meghalaya has 52 rural bank branches and Mizoram 32 as against only ten in Nagaland. The Nagaland Rural Bank being starved off cash resources has been slow in opening of more branches as against its target.Unless the state government seriously considers some way to ensure that substantial government funds are deposited with it, the rural bank can neither expand and which also means not being able to open more avenues for jobs for youths. There are many advantages when government funds are circulated within the states through various policies and the rural banks are at the forefront in this regard. Unless the state government reviews their policy on ensuring that departments are discouraged from establishing their own modes of deposits with corporate banks, excluding the SBI, the rural bank will continue to suffer and the very objective of serving the needs of the rural area would be defeated.

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