SRINAGAR: The Jammu and Kashmir government will enact the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities (SARFAESI) Act in the state very shortly as part of a two-pronged strategy to increase the credit-deposit ratio of the banks operating in the state.
"As far as the SARFESI act is concerned, the Chief Minister ( Omar Abdullah) said it is in the final stages of processing and as soon as that is processed, it will be enacted in the assembly or through an ordinance very shortly," Governor of Reserve Bank of India D Subbarao told reporters here.
The act, that helps in debt recovery, is not presently in force in Jammu and Kashmir due to the special status of the state under Article 370 of the constitution.
Referring to the proceedings of State Level Bankers Committee meeting here yesterday, Subbarao said the Chief Minister has also assured him that the District Administration including the District Industries Centres in the state will generate credit proposals for increasing the credit-deposit ratio of the banks in the state.
"The Chief Minister had assured us that the administration at district level, particularly the DICs, will be put to action to generate proposals for canvassing with the banks.
"With DICs and District Administration preparing sufficient number of credit proposals and SARFAESI act being enforced, the target of the 40 per cent CDR will be achieved by March 2014," he said.
The RBI governor said there was a suggestion that this aggregate target of 40 per cent credit-deposit ratio should be spread across banks in all 22 districts of the state and be made into an operational plan.
"I understand that this plan will be submitted to the Reserve Bank within a month's time, latest by June 15, 2013," he added.
Subbarao said the Reserve Bank has reiterated that no collateral should be sought by banks from small and medium scale enterprises for loans upto Rs 10 lakh.
"Even for loans above Rs 10 lakh, there is a credit guarantee scheme. The Chief Minister's grievance was that banks are not extending credit guarantee to SMEs for loans of more than Rs 10 lakh," he said.
The RBI governor said it has been found that not only in Jammu and Kashmir but across the country, sometimes the borrowers are themselves not inclined to accept the guarantee cover as they feel it could increase cost.
"But regardless, we told the banks that they must encourage borrowers to come under thisinsurance cover so that the credit flow improves," Subbarao said.
Subbarao said the Reserve Bank has asked banks in the state to prepare financial inclusion plans for providing banking access to 5400 villages of Jammu and Kashmir with population of less than 2000 people.
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