Page 41 - Banking Finance September 2020

ARTICLE

private investment in Dairy Processing, value addition (ii) DCCBs should desist themselves from the present
and cattle feed infrastructure. practice of undervaluing the gold ornaments, pledged
X Agriculture Marketing Reforms to provide marketing to them, thereby reducing the quantum of loan. This
choices to farmers. Barrier-free Inter-State Trade - practice not only diminishes the loan eligibility of the
Framework for e-trading of agriculture produce. customer but also brings down its outstanding in gold
loans, which are fully secured and will have an adverse
X Agriculture Produce Price and Quality Assurance.
impact on its interest income. DCCBs should follow the
6. New avenues for lending rate prescribed by Apex Bank for their branches, from
time to time, in assessing the value of gold while
Paradigm shifts in the priorities in various walks of our lives
sanctioning such loans.
right from the methodology in the basic schooling of our kids
to our consumption needs are noticed and the banks are
required to fine tune their lending policies according to the 6.3. Loans for laptops/smart phones:
changing needs of their clientele. In the education front, as a result of introduction of virtual
on-line sessions, every student, right from LKG to
6.1. Reduction of CRR to 3% with effect from 28 professional courses need to have either a smart phone or
March 2020 an android laptop to attend the sessions. Most people in the
As a result of the decision taken by RBI to bring down the lower economic stratum of our society may not afford to
CRR requirements of the banks from 4% of net DTL to 3% buy these devices in view of their poor financial conditions.
(first time at a such a low ebb for CBs), the liquidity position DCCBs may issue direct loans through their branches for
of the banks improved proportionate to their deposits and purchase of mobile phones or laptops, as the case may be,
other liabilities. [In Telangana, based on nine DCCBs' deposits by identifying good borrowers and also encourage PACS to
position as on 31 March 2020 (sans other demand & time finance through SHGs.
liabilities), the surplus liquidity that will be eased
approximately ranged between Rs.2.60 crore to Rs.16.40 6.4. Construction of private godowns
crore.] Thus, the banks' lendable resources increased to that In view of good monsoon this year, agricultural production
extent, offering a scope for enhancing their lending activities
is likely to be at record level in our State. Though the State
or investments to pave way for growth in their business and
Government procures the paddy from the farmers at the
profits.
minimum supporting price, the farmers are of the opinion
that agriculture is still a losing preposition in view of
6.2. Increasing the Loan to Value (LTV) of gold
unremunerative prices and exploitation of middlemen.
loans Absence of storage facilities is still a problem in the villages.
(i) RBI, vide its notification, No. DoR.No.BP.BC/6/21.04.048/ All most all the godowns constructed by PACSs with NCDC's
2020-21, dated 06 August 2020, with a view to further support in the past have now become obsolete. DCCBs may
mitigate the economic impact of the COVID-19 contemplate to finance a few individual private godowns at
pandemic on households, increased the permissible this juncture with proper due diligence.
Loan to Value (LTV) Ratio for loans against pledge of
gold ornaments and jewellery for non-agricultural 6.5. Financing SRTO
purposes from 75 per cent to 90 per cent, upto 31
Transportation of personnel as also goods is another major
March 2021. It appears that this circular was addressed
problem in villages as RTC is not operating their services
to CBs (including RRBs) and not to StCBs & DCCBs.
even before the incidence of COVID-19. Most of the villages
However, it is expected that similar instructions may
also be issued to DCCBs. Once these relaxations are are depending upon private transporters either for their
extended to DCCBs, they may give wide publicity and own commuting or for transporting their agricultural
increase its lending to this fully- secured-area of lending. produce, particularly vegetables and other perishables. This
Special gold loans schemes increasing the LTV at lowest would throw open ample scope for DCCBs / PACS to lend to
competitive rate of interest in the market for the this activity, which would be a win-win situation for the
general public may be introduced. banks and the villagers.

BANKING FINANCE | SEPTEMBER | 2020 | 41