It makes sense for banks to be in Sivaganga: FM
Claims every branch of every bank in the district is profitable and that people have accepted and are using services of banks
T E Narasimhan | Sivaganga
March 28, 2014
The first thing one notices while touring Sivaganga, around 450 km from Chennai, is the banks. There are just too many of them in the district, one of the dry regions in Tamil Nadu. Could it be because of the influence of finance minister P Chidambaram, elected seven times to Parliament from here?
Defending the notable presence of banks here, Chidambaram said Sivaganga makes “good business sense” for the banks. He also denied the allegation that excessive banking services are thrust upon the people of Sivaganga, saying there is an overwhelming demand for bank branches in the district.
Speaking to Business Standard during his election campaign covering 10 villages and around 250 km for son Karti, who is making a debut in this election, Chidambaram said the credit-to-deposit ratio in the district is 135 per cent. So, a lot of lending takes place for housing, education, agriculture, small scale industries and self help groups.
“The fact is, every branch of every bank in the district is profitable, which clearly shows people have accepted and are using the services of the banks,” said Chidambaram, who is not contesting this time.
Sources from State Level Bankers' Committee (SLBC) said most of the branches, except the ones which were opened in the past three months, are making profit.
Chidambaram added that without banks, industrialisation cannot happen and opening of banks means growth; that is why public-sector banks were given a target to open 10,000 branches across 543 constituencies.
According to SLBC’s data, the total number of branches in the district is 253, compared to 144 as on March 31, 2004. Banking penetration is one of the highest in Sivaganga; there is one bank branch for every 3,500 people.
The CD ratio here has increased from 56 per cent in 2004 to 77 per cent in 2009 and further to 120 per cent in 2013.
Deposits, which were Rs 1,341 crore as on March 31, 2004 has increased to Rs 4,597 crore. Advances has increased to Rs 5,325 crore from Rs 749 crore year ended March 31, 2004.
The flip side of the banking penetration in Sivaganga is that in some places, there is “unhealthy” competition because many branches are located at the same place.
For example, in Madhagupatti there are four banks, where one bank itself is finding difficult to survive. The other example could be Nattarasankottai where there are three banks.
"Around 250 villages are still unbanked in the district," said a senior official from the banking industry, who requested anonymity.
He added that there was hesitation in opening branches despite SLBC's willingness to share the list ofthese un-banked areas.
The NPAs in the district are on par with other parts of the country at around 4-5 per cent, and most of them are from agriculture sector, self help groups and education. As the district is backward in industrialisation, NPAs from SME sector are very negligible. One big account is from a private mill, which owes around Rs 63 crore.
The other positive news is that de to the presence of banks the district is slowly arresting the flow of remittance through 'unauthorised channels'. The banking industry estimate is that before 2004, almost 95 per cent of the remittance was through the unauthorised channel, which the locals call "hundi", and which in modern terminolgy is called 'Hawala'. This was brought down to 80 per cent.
Remittance transactions are being carried out between people who migrated abroad in search of work, especially west Asia as labourers.
Sivaganga, which is around 450 kilometers away from Chennai, still continues to face difficulties in attracting industry. The two major source for employment are textile mills such as Kaderi Ambal at Karaikudi and Jayasundaram Spinning Mills.
There is a lot of cottage industry and poultry farms, which are mostly run by the older generation as the much of the younger lot has moved out of the district in search of jobs to places like Chennai, Coimbatore, Tirupur and to the Gulf.
Box
The allegation an incumbent finance minister has been pushing for opening more bank branches to his constituency is not a new one. When President Pranab Mukherjee was the finance minister in the current UPA government, his home constituency of Jangipur witnessed a large number of branches opening in every nook and corner of the region, according to earlier reports.
For instance, according to a report quoting the SLBC in 2010, as many as 16 bank branches came up in Murshidabad in just six months, and more than three-fourth of these were in the finance minister’s constituency.
From the country’s largest lender, State Bank of India, to some of the smaller banks such as United Bank of India, most have opened multiple branches in Jangipur and adjoining areas. However, local bureaucrats and residents have been quoted as saying that nothing much has happened here apart from the mushrooming of bank branches and employment growth in the area has been negligible. Interestingly, Chidambaram, who is currently campaigning for his son Karti from his erstwhile constituency, is harping about creating more employment once the new government comes to power.
Defending the notable presence of banks here, Chidambaram said Sivaganga makes “good business sense” for the banks. He also denied the allegation that excessive banking services are thrust upon the people of Sivaganga, saying there is an overwhelming demand for bank branches in the district.
Speaking to Business Standard during his election campaign covering 10 villages and around 250 km for son Karti, who is making a debut in this election, Chidambaram said the credit-to-deposit ratio in the district is 135 per cent. So, a lot of lending takes place for housing, education, agriculture, small scale industries and self help groups.
“The fact is, every branch of every bank in the district is profitable, which clearly shows people have accepted and are using the services of the banks,” said Chidambaram, who is not contesting this time.
Sources from State Level Bankers' Committee (SLBC) said most of the branches, except the ones which were opened in the past three months, are making profit.
Chidambaram added that without banks, industrialisation cannot happen and opening of banks means growth; that is why public-sector banks were given a target to open 10,000 branches across 543 constituencies.
According to SLBC’s data, the total number of branches in the district is 253, compared to 144 as on March 31, 2004. Banking penetration is one of the highest in Sivaganga; there is one bank branch for every 3,500 people.
The CD ratio here has increased from 56 per cent in 2004 to 77 per cent in 2009 and further to 120 per cent in 2013.
Deposits, which were Rs 1,341 crore as on March 31, 2004 has increased to Rs 4,597 crore. Advances has increased to Rs 5,325 crore from Rs 749 crore year ended March 31, 2004.
The flip side of the banking penetration in Sivaganga is that in some places, there is “unhealthy” competition because many branches are located at the same place.
For example, in Madhagupatti there are four banks, where one bank itself is finding difficult to survive. The other example could be Nattarasankottai where there are three banks.
"Around 250 villages are still unbanked in the district," said a senior official from the banking industry, who requested anonymity.
He added that there was hesitation in opening branches despite SLBC's willingness to share the list ofthese un-banked areas.
The NPAs in the district are on par with other parts of the country at around 4-5 per cent, and most of them are from agriculture sector, self help groups and education. As the district is backward in industrialisation, NPAs from SME sector are very negligible. One big account is from a private mill, which owes around Rs 63 crore.
The other positive news is that de to the presence of banks the district is slowly arresting the flow of remittance through 'unauthorised channels'. The banking industry estimate is that before 2004, almost 95 per cent of the remittance was through the unauthorised channel, which the locals call "hundi", and which in modern terminolgy is called 'Hawala'. This was brought down to 80 per cent.
Remittance transactions are being carried out between people who migrated abroad in search of work, especially west Asia as labourers.
Sivaganga, which is around 450 kilometers away from Chennai, still continues to face difficulties in attracting industry. The two major source for employment are textile mills such as Kaderi Ambal at Karaikudi and Jayasundaram Spinning Mills.
There is a lot of cottage industry and poultry farms, which are mostly run by the older generation as the much of the younger lot has moved out of the district in search of jobs to places like Chennai, Coimbatore, Tirupur and to the Gulf.
Box
The allegation an incumbent finance minister has been pushing for opening more bank branches to his constituency is not a new one. When President Pranab Mukherjee was the finance minister in the current UPA government, his home constituency of Jangipur witnessed a large number of branches opening in every nook and corner of the region, according to earlier reports.
For instance, according to a report quoting the SLBC in 2010, as many as 16 bank branches came up in Murshidabad in just six months, and more than three-fourth of these were in the finance minister’s constituency.
From the country’s largest lender, State Bank of India, to some of the smaller banks such as United Bank of India, most have opened multiple branches in Jangipur and adjoining areas. However, local bureaucrats and residents have been quoted as saying that nothing much has happened here apart from the mushrooming of bank branches and employment growth in the area has been negligible. Interestingly, Chidambaram, who is currently campaigning for his son Karti from his erstwhile constituency, is harping about creating more employment once the new government comes to power.
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