Nagaland government challenges banks to raise credit-deposit ratio

DIMAPUR — Nagaland government has issued a direct challenge to banks operating within the state to raise the credit-deposit (CD) ratio to at least match the national average.

This call to action came during the Nagaland Credit Empowerment Summit held on Friday at Noune Resort in Chümoukedima.

Addressing a press conference following the summit, Chief Secretary J Alam said that the state’s low CD ratio was a key concern highlighted during discussions with representatives from various banks, financial institutions, business associations, insurance companies, and deputy commissioners from all the districts.

He said that the government has urged banks to improve credit disbursement and pledged to provide necessary support and facilitation to address any bottlenecks.

The chief secretary also said that the banks have been challenged to extend credit facilities covering at least 1000 educational loans and 2000 skill-based loans.

NPA and infrastructure

Alam said that the meeting addressed expanding banking services to unbanked areas, increasing the number of branches, and improving credit flow within the state. The banks had also raised concerns, which the government took serious note of. “The state government has assured that the necessary facilitation and help will be extended wherever is required,” he said.

Elaborating on the issues raised by banks, particularly the challenge of high non-performing assets (NPAs), he pointed to the existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) which scheme guarantees up to 85% of loan amounts and provides a safety net for banks.

Another issue—the lack of adequate infrastructure in remote areas—has been taken note of and the government would instruct deputy commissioners to provide necessary support, he said.

New initiatives, MoU

The chief secretary said that during the summit, Chief Minister Neiphiu Rio launched several initiatives and signed two memoranda of understanding (MoU) aimed at boosting financial inclusion and empowerment, including an Annual Credit Plan increasing the credit flow to priority sectors, Loan Tracking Ecosystem to provide real-time information on loan applications and streamline communication between applicants and banks. To provide easier access to credit for entrepreneurs and small businesses, the chief minister also introduced State-Sponsored Collateral-Free Loans, he said.

The summit also included the signing of two Memoranda of Understanding. The first MoU, signed with Tata AIG, will pave the way for the launch of the Chief Minister’s Life Insurance Scheme while the second pertained to providing accidental insurance coverage of up to INR 75 lakh for all Nagaland Police personnel.

Meanwhile, Finance Commissioner Sentiyanger Imchen acknowledged banks’ reluctance to lend due to NPA concerns but maintained that the state’s NPA rate was not alarmingly high. He highlighted the CGTMSE scheme, launched during the summit, as a significant step towards mitigating NPA risks and encouraging banks to lend more freely.