Pranab Mukherjee asks Karnataka to buck up on education loans

Union finance minister Pranab Mukherjee has advised Karnataka, Andhra Pradesh and Kerala to put additional effort in extending education loans to needy students.

The state must popularise Model Education Loan Scheme of Indian Banks’ Association, which has recently been revised. Similarly, banks should also ensure time-bound disposal of loan applications from students, said Mukherjee, addressing the meeting of chief ministers and heads of banking institutions of south zone, in Bangalore on Sunday.

However, Mukherjee appreciated Karnataka’s performance in extending housing loans. “Karnataka has shown a remarkable performance of 85% in disbursing housing loans in 2010-11,” he said. He wanted all southern states to focus on growth of housing loans as the demand is huge.

Political instability in Andhra Pradesh over the Telangana issue seems to have hit its industrial sector as the state has attained just 20% rise in lending for micro- and small-enterprises while other southern states have registered an average growth of 36.3%. Mukherjee advised Andhra Pradesh to devise suitable schemes in location specific industry groups for improved credit flow.

Mukherjee expressed concern over the delay in execution of 14 large projects worth Rs39,424 crore in various sectors owing to want of various approvals. “I have requested the chief ministers to pay personal attention to this aspect and review the status of approvals periodically to prevent cost and time overrun of the projects,” he said.

Mukherjee laid emphasis on issuing Kisan Credit Cards (KCCs) since it is an apt vehicle for flow of agricultural credit.

“As on May 31, 2011, the banking system has issued Rs10.42 crore KCCs. The state governments should take this task on a campaign basis so that KCCs are issued to all eligible farmers,” he added.

Mukherjee also wanted states to ensure that no eligible farmer is left out from availing the short-term agriculture loans available at 4% interest rate.

Mukherjee also instructed the Life Insurance Corporation of India to ensure that it opens at least one office in every district as part of the financial inclusion programme.

Chief minister DV Sadananda Gowda, in his address, said that lack of access to formal financial services at reasonable costs is a major constraint faced by the poor. The non-formal financial sector meets their needs only partially and has an exploiting nature.

“We have to work together to extend the reach of formal financial institutions with right products and convenient access,” he said.
Andhra Pradesh CM Kiran Kumar Reddy, Kerala CM Oommen Chandy, Puducherry CM N Rangaswamy and Tamil Nadu finance minister Panneerselvam, Union minister of state for finance Namo Narain Meena and heads of various financial institutions attended the event.