Date:23/01/2007 URL: http://www.thehindubusinessline.com/2007/01/23/stories/2007012304040600.htm

Back Minorities quota: IBA begins debate

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Mumbai Jan. 22 The Government's proposal to set aside a portion of total loan disbursement for minority communities has met with mixed reactions from banks.

According to reports, the Government has asked the Indian Banks Association (IBA) to examine the proposal of earmarking 16 per cent of priority sector lending in all categories for minority communities. Currently, 40 per cent of a bank's advances have to be made to the priority sector.

"The banking industry has always been lending to minorities. It is nothing new for banks," said Mr V.P. Shetty, Chairman and Managing Director, IDBI Ltd and Chairman of Indian Banks' Association.

"We have not taken a view on it but once IBA meets, we will discuss this issue and communicate our views to the government," he added.

Dr K.C. Chakrabarty, Chairman and Managing Director, Indian Bank, said the process of debate in the IBA had begun.

"If there is a minimum obligation to the minority communities, then it should not just be in the area of credit but should be extended to all facilities. The crucial aspect is that the borrower has to be creditworthy," he said.