SBI questions Bengal's absorption ability as state FM asks for better CDR

Even as West Bengal Finance Minister Amit Mitra upped his pitch over State Bank of India (SBI) — the country's largest bank — to increase its credit-deposit ratio (CDR) in the state by disbursing more loans, the bank's Chairman Arundhati Bhattacharya questioned the state's ability of credit absorption.

At an event organised by industry body FICCI, Mitra alleged that SBI's CDR in West Bengal stands at 50.58 per cent against the sector's CDR of 64 per cent in the state and 74 per cent pan-India.

"This is not acceptable. CDR of SBI and other banks have to improve", Mitra said.

Bringing in various data points related to the banking sector in the state and SBI's role in it, Mitra hinted that compared to the overall banking structure in the state, SBI has not been playing its role to the fullest capacity.

According to Mitra, during the financial year (FY) 2016-17, 16,34,553 Kisan credit cards were issued in West Bengal of which SBI had issued 1,33,720 such cards which is 8.2 per cent of the total Kisan credit card disbursals. In the agri loans sector, SBI's exposure to the total loans was nine per cent of the total Rs 34,175 crore disbursed.

Mitra added that in case of financing the self-help groups (SHG), while a total amount of Rs 2,24,884 crore was disbursed, SBI's exposure under this category comprised of 9.7 per cent. For micro-small sector financing, against a total disbursal of Rs 29,187 crore, SBI's loan-book in this sector of the economy stood at Rs 3,194 crore.

"There have to be more efforts. From a reactive approach, a proactive approach needs to be taken", Mitra said.

Bhattacharya, however, maintained that in case SBI goes on disbursing more credit to an economy, which lacks the capacity to absorb and then repay it back, the bank runs the risk of increasing its non-performing assets (NPA) on account of this action.

"We need to create the right conducive situation for credit absorption; else it will generate more NPA, which will create more problems", she said adding that SBI is targeting to opt for financing an entire value chain instead of financing isolated section of a sector.

At a later instance, she clarified that the eastern region in the country, which includes West Bengal, ranks low in its credit absorption ability.

"I assure you that banks are aware what they need to do," she said adding that small but essential measures like digitisation of land records and better control over the flow of money will help banks to increase their CDR as accurate data will be available.

Besides, SBI's top official said that in case a reputed and "good" NGO is associated with SHGs, they will not be having problems in getting finance from SBI.

However, Bhattacharya said that digitisation and automation of the banking system, including SBI, is an inevitable future and the banking system is getting more intrusive by accessing personal records of its customers to improve services.

Nevertheless, it was a crucial point where the Mitra and Bhattacharya differed in their opinion. While the official said, "We have found that people don't mind if it is to their advantage", the state's finance minister challenged Bhattacharya by asking for cognitive data. "Is there a research? People are afraid too much if their personal life is known", he said.

Besides, while Bhattacharya stressed on technology adoption like big data, analytics, cyber security and others to play a key role in times ahead, Mitra contended her opinion publicly by saying that the approach of people, backed by rewards and punishments, needs to be changed. "Technology is no big deal", he added.