Anticipating high demand in the second half of the fiscal, finance minister Pranab Mukherjee today urged public sector banks (PSBs) to increase lending to employment-generating sectors, particularly to sectors like agriculture and small and medium enterprises.

In his meeting with the chiefs of banks based in the northern zone, the minister emphasised that banks should step up credit flow to agriculture in subsequent quarters to meet their current year priority sector lending target. “Banks should make use of the special scheme that allows one per cent subvention on interest rate offered to farmers to improve repayments,” Mukherjee told the bankers in the meeting.

Besides agriculture and SMEs, banks have been asked to pay attention to housing loans of up to Rs 10 lakh. In this sector too, the government had introduced an interest subsidy of one per cent on all individual housing loans up to Rs 10 lakh and advised banks to pay due attention to such borrowers. He emphasised the need to target these loans to the rural areas so as to meet the housing needs of the rural population.

The finance minister, who is taking stock of the performance of the banks in the first half of the fiscal, also said that the growth rate of advances to micro and small enterprises has been around 13 per cent for the last six months. However, this needs to be improved in view of the target of 20 per cent on year-on-year growth.

This was the first such meeting and Mukherjee is expected to travel over the next few weeks to meet bankers of the other three zones. The meeting was attended by MoS for finance Namo Narain Meena, finance secretary Ashok Chawla, additional secretary (financial services) G C Chaturvedi, chiefs of north zone-based public sector banks, chairmen of financial institutions and officers from the ministry of finance.