Chidambaram calls for proper utilisation of funds
4 Oct 2008, 2150 Hrs

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New Delhi, Oct 4 Finance Minister P. Chidambaram on Saturday called for proper utilisation of funds for various schemes and rejected the demand of some States to allocate funds for implementation of the sixth pay commission recommendations.

Addressing a summit on banking and credit issues in the North Eastern region of the country in New Delhi today, he pointed out that banking system is not a substitute for government. The Minister also called for drawing some lessons for the Indian banking industry from the ongoing global financial turmoil.

Chidambaram said that bank should function only as a bank to avoid landing in the kind of trouble that is now being faced by the banks in the United States and the Europe. He said the crisis is mainly due to non-payment of loans by the borrowers and the mortgage crisis.

Responding to the concerns raised by the representatives of the North Eastern States, the Finance Minister said that the number of banks in the region can only be increased gradually.

He said neither the branch network nor credit deposit ratio can increase suddenly as there is a limit to growth and there has been substantial progress in this area under the United Progressive Alliance (UPA) rule.

Addressing the summit, the Minister in charge of the North East Development, Mani Shankar Aiyar urged banks to adopt unconventional approach and out of books solutions to deal with the specific problems of the North Eastern region.

He said 14 lakh crore rupees of investment is estimated to be made in the region by 2020 leading to faster economic development of the region.

Aiyar called for greater coordination among the states of the region for its integrated development. Chief Ministers and other Ministers from the North East participated in the day long conference which prepared a blue print for effective banking and credit issues.

Senior functionaries of various banks and financial institutions also participated in the deliberations. (ANI)