BHUBANESWAR: Many banks have reportedly failed to meet the priority sector lending targets and maintain credit-deposit (CD) ratio below 60 per cent, a pre-requisite for handling deposits and business of State public sector units (SPSUs), urban local bodies (ULBs), development authorities and State-level autonomous societies. This has resulted in sub-optimal provision of credit in many segments of the State economy, Finance Secretary JK Mohapatra said in a circular to all secretaries.Commercial banks operating in the State have a major role in facilitating development process by making credit available for production, investment, trade and services. Bank credit is also a significant input of capital formation, he maintained.Acting tough on such banks, the Finance Department recently directed other Government departments to issue necessary instructions to PSUs, autonomous bodies and development authorities not to park their funds or transact any financial business with the banks which have failed to meet the RBI norms.Since this performance-based policy is introduced for the first time, the Government decided to apply a liberal set of norms for the current financial year. Commercial banks which have maintained CD ratio of 55 per cent and had achieved priority sector lending of at least 35 per cent during 2010-11 will be eligible to handle business and deposits of the State PSUs, ULBs, development authorities and State-level autonomous bodies.However, the eligibility criteria from the next financial year will be tightened. Banks having 60 per cent CD ratio, 40 per cent credit lending to priority sector and minimum achievement of 80 per cent of their annual credit plans will be eligible to transact government business. Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, State Bank of India, State Bank of Travancore, UCO Bank, Federal Bank, HDFC Bank and Axis Bank are the eligible financial institutions for the current financial year.
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