Banks should prepare to face global competition; Kalam

New Delhi, May 30 (UNI) President A P J Abdul Kalam today asked the banking industry to equip itself to brace for global competition and provide loans in a greater measure to the farm sector and enhance the scope of educational loans.

"The banking system has to anticipate the needs and challenges of 21st century banking and prepare itself rather than react to them," Mr Kalam said in his inaugural address at the bicentennial celeberations of the State Bank of India.

The function was also addressed by Finance Minister P Chidambaram and SBI Chairman A K Purwar.

Mr Kalam said the banking community needs to be forward looking.

Besides, it should associate with technical personnel to facilitate policy makers, scientists and industrialists to undertake different jobs connected with nano-technology products and services, whose market is likely to reach 1-2 trillion dollars by 2015.

"I would suggest that State Bank of India may undertake such forward looking projects relevant to Indian environment in order to meet the international demand and come out with comprehensive reports and business proposals which will provide different segments of society a clear direction for channelising their effort and investment leading to national prosperity. This indeed is a proactive action of the bankers." Expressing disappointment that the facility of educational loans was available only for students in best engineering colleges, medical colleges and top business schools, Mr Kalam asked the banking industry to examine the possibility of providing loans to students who wish to pursue science and commerce as a career.

In addition, Mr Kalam said, banks must also find a method to make the loan facility available to meritorious students who cannot get admission into top engineering, medical or B-school in view of stringent competition.

Mr Kalam said the creation of the human capital will be the greatest contribution that SBI will make for national development, particularly when India is blessed with 540 million youth below twenty five years of age.

He said the banking sector also needs to adopt schools to ensure a better deal for the poorer strata of society.

"I understand that there are around 14,000 SBI branches spread all the country. I would recommend at least 10 per cent of these branches namely 1,400 adopt at least one primary and one secondary school each in their respective region of operation for improving the infrastructure and promoting value based quality education to the youth in that region. This mission will enhance SBI business." The President said to address the continuous requirements for on the job training, banks need to use modern technology of tele-education.

Mr Kalam suggested seven missions for the banks for immediate implementation. These are: -- Increasing the agriculture and agro processing credit to 20 per cent of the total loan disbursal within the next three years with visible productivity faster. This will include advances for setting up of Providing Urban Amenities in Rural Areas(PURA) complexes and small enterprises in PURA clusters.

-- Creating and nurturing five rural development projects similar to bio-fuel project and sea weed project which can be applicable for large number of villages leading to employment generation through enterprises for at least five million rural youth; -- Adopting and innovatively funding at least one lakh sick SSI units so that latest technology can be infused; -- Providing funds at competitive interest rates for creation of corporate hospitals which can provide networked healthcare for the rural community; -- Participate in infrastructural development including provision of 50 million energy and water efficient quality houses with basic infrastructure in the rural areas in association with State and Central urban development authorities; -- Allocating at least Rs 5,000 crore for SBI Cap Venture for funding to innovative scientists and technologists who can provide quality ideas for faster societal transformation commencing from the financial year 2007-08 including development of ICT based knowledge products, software development and provision of software services.

-- Eliminating the dynamics of Villagers loan. The President said villagers borrow money from "B" to payback the loan taken from "A". Next stage they borrow money at a higher interest rate from "C" to pay back "A" and "B". Such burden of cycle of loan creates creates societal problems and needs to be broken.

In his address, Mr Chidambaram said he visualised India becoming a financial service provider to the global community.

The Finance Minister outlined the history of the SBI and said its predecessors and its associate banks have combined their roles as important instruments of public policy.

UNI GS MP HS1913