Social justice NPAs new worry for banks

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By Our Special Correspondent

New Delhi, September 29: In the last few years, the branch managers of the public sector banks were under tremendous pressure to disburse loans by holding camps as part of the social justice outreach of the Central government, particularly for the scheduled castes.

Now it has emerged that the banks are faced with a growing account of the non-performing assets from the loans extended to the scheduled castes venture capital fund (SC-VCF).

The Central government has asked the banks to be cautious in extending the loans under the SC-VCF, and exercise the ‘backward-forward’ linkages as part of the due diligence.

“It was found that there are a lot of cases in SC-VCF where accounts have become NPA. Banks were directed to examine the backward forward linkages at the time of sanctioning of loan. Banks may take services of advisors/consultants to help the SC entrepreneurs for project appraisal before sanctioning of loan and to ensure the proper implementation of projects,” Vijay Sampla, chairman of the National Commission for Scheduled Castes told reporters on Thursday.

He directed that bankers should ensure that every eligible scheduled caste person applying under the credit enhancement guarantee scheme for SCs or their such schemes gets the benefit thereof.

One of the senior executive of a public sector bank told The Raisina Hills that they have been under much pressure from the Central ministries for a higher disbursal of funds under the SC-VCF, and efforts have been to meet targets in quick time without doing the necessary due diligence.

Sampla also took stock of the vacancies in the banks against the SC quota, and called for their immediate filling up.

“The banks will send a report on reservation policy, with regard to recruitments and coverage of SC beneficiaries in all the schemes, and submit the progress of all the schemes to the NCSC, twice every year. Also, banks have been asked to make physical presentations before the NCSC during the period April 14-30 (Birthday of Dr. B.R. Ambedkar) every year; and send a report in the second fortnight of October of each year,” said Sampla.

The banks were also directed to give minimum wages to all the outsourced employees and submit the report regarding this to DFS and NCSC. The banks will review the data of all the loans that were approved but not disbursed, and analyse the gap, added Sampla.

He also said that the banks will conduct the drive from October 2 to December 31 for filling up the backlog vacancies. Also, the banks have been directed to clear and complete the pending grievances of SCs during this drive, till October 3, he added.

“The banks’ branches will complete the targets assigned to them, especially the obligations towards the members of the SC community, as per the Stand Up India Programme of the Union government. Similarly, with regard to other union government schemes like NRLM, NULM, Mudra, Swabhiman and Awas Yojana, banks should set a target to achieve the percentage earmarked for SC beneficiaries,” Sampla added.