Virbhadra Singh, Chief Minister, raised the issues with regard to the opening up of a separate Reserve Bank of India office for Himachal Pradesh within the state to facilitate the banking services to the people of the state by the banking institutions operating. He had discussions with the visiting Governor of Reserve Bank of India Dr. Y.V.Reddy, at a high level meeting here last evening.
Chief Minster said that the income of the people in the state had increased substantially with the growth in various income generation activities and people were also habitual of saving out of their income, making investments and depositing the same in the banks. He said that high rate of literacy had been responsible for making people aware of the various financial assistance and loan facilities being offered by the financial institutions hence they have also started borrowing loans for increasing their income by way of starting self-employment avocations. He said that it had substantially increased the financial activities and more branches were opening up in the towns and even in the rural areas where people too want their savings put to security and interest earning activities. He added that it had created demand for financial governance of all the financial institutions operating in the state by the Reserve Bank of India from within the state and hence requirement of the separate office was imminent.
Virbhadra Singh said that his government had recently decided to merge the liquidated Mandi Urban Cooperative Bank with the State Cooperative Bank to secure the money of the depositors who had posed faith in the cooperative banking system. He said that the state government had initiated legal action against the defaulters and necessary penalty imposed over them to recover the money. He said that the local bank had built credibility with the depositors and was functioning to the satisfaction of the customers till the malfunctioning was noticed. He said that the state government had to intervene by swinging into action to save the deposits of the account holders and ultimately conclusion was drawn after taking all aspects into consideration to merge the Mandi Urban Cooperative Bank with the State Cooperative Bank and the request had been made to the Reserve Bank of India to permit the amalgamation so that banking functioning could be resumed and interests of the depositors protected for maintenance of the faith in the cooperative banking in the state. He urged the RBI authorities to relax the norms for opening of more state cooperative bank branches within and outside the state.
Singh said that the demand for opening of new branches of the nationalized and urban cooperative banks had been pouring in from all quarters of the state which was also required to facilitate the convenient banking to the customers. He said that the state government had been recommending the requests of various banks for opening of their branches at different places in the state to the Reserve Bank of India, which needed to be taken up on priority for granting permission and in the best interest of the depositors and banking system as well. He said that there was need for enhancement in the credit-deposit ratio for the improvement of the banking and financial activities in the state which needed to be taken note of by the Reserve Bank of India authorities.
Chief Minister also requested the Governor to revise the Non-SLR investment ceiling and other restrictive norms on State Cooperative Bank and district cooperative banks from existing 10 percent of the total deposits to 25 percent to help developmental activities take accelerated pace and earn more interest over the deposits of the bank. He said that there were a number of commercial activities taking place, including construction of hydro-electric projects in the state, where heavy investment scope existed. He said that the cooperative banking facilities needed to be encouraged and diversified in the best interest of the state. He said that there was also need to revise the single exposure norm to allow banks to invest in the Public Sector Undertakings as well.
Singh further raised the matter of granting permission to the multi-national companies showing interest in investing in the industrial and hydro electric projects in the state. He said that liberal attitude needed to be adopted by the RBI authorities in the cases of the foreign companies generating income and employment in the state and such gesture would encourage other multi-national companies to invest in other activities in the state.
Dr. Y.V.Reddy, Governor, Reserve Bank of India, assured the Chief Minister, that all the issues raised by him would be examined on top priority and all out efforts made to deliver the benefits to the state. He informed that the RBI was likely to start modern banking in the rural areas in a big way and the same would benefit the people with better and improved banking facilities in Himachal as well. He appreciated the best banking system in practice in the state and for maintenance of the guidelines of the RBI by all the financial institutions operating in the state.