Credit flow to minorities drops to 4-year low in Karnataka

Bank credit availed by the six minority communities in Karnataka has touched a four-year low, official data show, and the government said it will ask banks to lend more.

At least 15 per cent of all loans in the priority sectors should go to minorities, as prescribed by the Reserve Bank of India. But at the end of September, this metric stood at 12.44 per cent, the lowest since September 2017.

Karnataka has six minority communities -- Christians, Muslims, Buddhists, Sikhs, Zoroastrians (Parsis) and Jains. Their outstanding loans amount to Rs 39,023 crore in 20.01 lakh accounts in Karnataka as of September this year. In the corresponding period last year, the minorities had outstanding loans of Rs 59,038 crore in 29.90 lakh accounts.

Lending activity, however, is good in Bidar, Kalaburagi and Dakshina Kannada.

These three minority-concentrated districts identified by RBI have seen loans above the mandatory 15 per cent level.

Minority Welfare Secretary P Manivannan told DH that six more districts have been identified for banks to focus on lending to minorities -- Ballari, Bagalkot, Koppal, Raichur, Yadgir and Haveri. “These districts have a large minority population,” he said. “We will be very happy to work with [RBI]. In fact, I will hold a meeting with the bankers.”

“We need to improve terms of loans offered, loan amounts and the applicable interest rates,” former legislator Ivan Nigli said. Nigli also said there should be a “push mechanism” from the banks and the National Minorities Development & Finance Corporation to improve awareness and
access.

A large chunk of the loan applications received by the banks are routed through the state-run Karnataka Minorities Development Corporation (KMDC). The Corporation has at least four loan schemes for minorities.

Issues related to the credit flow to minorities came up for discussion at the State Level Bankers’ Committee (SLBC) meeting late last week. “We discussed how to improve the flow,” Canara Bank general manager B Chandrasekhara Rao, the SLBC convener, said.

According to Rao, KMDC has to process the applications. “There is some slowness on their part.”

Also, banks will streamline data collection on credit to minorities. “As we understand, data used to be wrongly classified earlier. Now, we have automated the flow of data and it will be extracted directly from core banking,” Rao said.

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