Speeches
Address by Dr. ASIM DASGUPTA
HON'BLE FINANCE MINISTER, GOVT. OF WEST
BENGAL
I convey my thanks for inviting me on this very special occasion
of 57th Foundation Day of the Bank. I extend a bouquet of warm greetings to all of you
including the junior most staff of this Bank. On this occasion we look back into the past,
assess the present and then look forward to the future. As we look back in the past. We
have a scattered diagram of waves which shows ups and downs but there is a wave behind the
waves, that's a rising wave. It is like an upsurge. The trend is very sharply
exponentially rising and it must be due to collective efforts led by you.
We all know that UBI emerged as an amalgamation of four major
Banks on this day in the year 1950. There is always a history, behind a history and it was
tangentially mentioned by you as well. There were four important banks, the Comilla
Banking Corporation, the Comilla Union Bank, the Bengal Central bank and the Hooghly Bank.
These four banks were doing reasonably well in 1920s and in 1930s. But in 1940s there was
a problem across the country in the banking business. There was a massive plight of
deposits out of these four banks. There was a crisis. There was a need for amalgamation.
And, the amalgamation did take place and one UBI was formed on 18th December 1950. But it
was not only born, it was passed to the hands of great Late B.K. Datta, a remarkable and
efficient person who had a concrete plan of action.
If I recall correctly, in 1950 the UBI as a whole had a Deposit of
Rs. 27 crore and the Advance was Rs. 13 crore. So the CD ratio was around 48%. In between
1950 and 1969, Deposits increased from Rs. 27 crore to Rs. 168 crore which was more than
500% of growth and the Advances increased from Rs. 13 crore to Rs. 118 crore which was
more than 700% increase and the CD ratio increased all the way upto 78% plus. So that was
a very positive part of the history. Historically more than 50% of the branches were
located in this State and also other parts of Eastern and North Eastern States. People of
these States started having an emotional attachment with this Bank. When I was a young
Lecturer way back in 1967, my joint account, with my mother and brother, was opened with
UBI at Bhowanipur Hazra area. I had a feeling of comfort when I moved there and that
feeling of comfort still lies with me.
In the first part of 1969, the Bank was nationalized along with
major commercial banks of the country. If you look at the history between 1969 and 1996,
there was remarkable growth of Deposit, Credit and Branch expansion. There was lot of
enthusiasm. When I was not a Minister and was teaching at Kolkata University as a Reader,
Asok (Asok Banerjee, GM) and Manoj, (Manager, SLRP.Deptt.) were my students. Incidentally
many of my students are in your bank and I still remain in touch with them and I get to
know lot of about your bank which is on the whole very positive. When the expansion was
taking place, I recall, in late seventies or early eighties, I was teaching in the
University and was a member of the State Planning Board, IRDP Programme was launched and
UBI being the Lead Bank, SLBC was always chaired by the CMD of UBI and we are proud about
the leadership given by UBI.
Then coming into late eighties and early nineties the problems
could be seen. Because of UBI's historic origin, the bank has advanced credit to major
industrial spheres of Eastern and North Eastern States to Engineering, Jute and Tea etc.
All of us know that these industries started facing problems. Tea industry was going
through a trauma for loss of export market and there were internal problems. Jute industry
has always shown, in my view, a schizophrenic picture. As a result, some of your loans
became NPA. Meanwhile the rules of the game were made stiffer and UBI along with other
banks having head quarters here, started facing severe problems and in the trough of the
whole thing the loss is what you exactly mentioned, more than Rs. 1,000 crore.
The day UBI has started taking up the challenges from early
nineties to 2001-02 and now on for a decade or so (UBI didn't get the recapitalizations
from Govt. of India), UBI fought on its own way and it was a collective internal resolve
to increase its own efficiency that too without loosing sight of the importance of social
priorities. UBI's advances to priority sector are a matter of great pride.
The West Bengal economy also started looking up. We started with
agriculture, with land reforms, which in simple economics is a move for equal
contribution. The Fund Management Study Data indicates that highest record of overall
production and employment generation per hector is obtained not from the land of very big
farmers. We want to maximize output and employment generation which is happening and this
is also the thrust of 11th Plan document. We started doing in that direction and
agriculture started moving up. The latest State wise data published by Central Statistical
Organization over the period 1993-94 to 2002/03, for the country as a whole, the total
agricultural production, it has been 1.5%. But for West Bengal with due modesty I would
say it was 3.7% and it becomes highest in the country. We are glad about it, but we have
miles to go.
There is tremendous need for diversification. There is remarkable
improvement in horticulture, floriculture and in pisciculture also. As a result, it has
created purchasing power and internal market and the industry started responding.
From 1991 to December, 1995, around 1128 units in unorganized
sector had invested Rs. 29,000 crore and production started and our position, to our
surprise, was second amongst in all the states. UBI has a very important role there, in
the sphere of unorganized industrial sector. For 1991-92, over this period, the number of
working manufacturing units in West Bengal increased from 19 lakhs to 27 lakhs and created
an employment of 59 lakhs of people. And again to our surprise we have beaten Maharastra.
In SSI the West Bengal has started doing very well and UBI is one of the few banks who
would appreciate that thing.
Along with Large Sector, the Small Sector, which has been
underscored in the Union Plan Document, brings the equal competition and employment
intensity which is required. The lowest end of Small Scale Sector is the Self Help Group.
There are about 5 lakhs of SHGs. in West Bengal covering all the villages of the state.
More than 90% of those are led by poor and rural women. These SHGs' are having 50 lakhs of
members. They save and more than 90% of their loans are repaid. So, they are your good
clients. That's the new sector which is now coming up.
If I take the last 5 year's data from the CSO ending with 2005-06,
for West Bengal the average rate of State Domestic product has been 7.1% as against the
average rate of growth of GDP over this period which was 6.7%. So the State's average rate
of growth is higher than the rate of GDP growth over the 5 years period. As a professional
economist one must not depend on one year's data, one has to have at least 5 year's moving
average, otherwise you can be misled. The CSO figure indicates previously Karnataka was on
top amongst all the States but now West Bengal has beaten Karnataka and here is the
highest rate of growth. Do you know which is the fastest growing Sector contributing more
than 10% of average annual growth? , That is the Services Sector. Do you know in the
Service Sector which is the fastest growing sector in West Bengal? It is the Banking
Sector. This is the sector to be looked into.
If I take the period of around 5 years ending 2005, within the
Banking Sector, the UBI has among the fastest rate of growth. The Net Profit of UBI has
increased by 522%. You have wiped out all your losses and it is a clean Balance Sheet and
Rs.45.87 crore is the Net Dividend that you have paid. So within the Banking Sector UBI is
the front runner. Your internal drive plus the State's economic growth has made it
possible. Eastern and north Eastern economy is growing up and since your banking history
connects and it's tied up with the growth of these areas, you don't have to be worried
about. This is the fastest growing part of India and we will grow with you and the 'Look
East' policy of the Prime Minister is most opted here. So, when you are moving - a new
horizon is opening up before you. That's why UBI on its own effort has absolutely turned
around and, while you are looking forward, may I make a request to fulfil the gaps in the
field of agriculture and allied sectors.
We did a survey through Calcutta University, my students did it,
ISI also confirmed it; Of the total credit requirement in West Bengal in agriculture and
allied sector is at least Rs.10,000 crore. You are aware as the Chairman of the SLBC last
year the banks responded very well. In fact you will be happy to know that the projection
that the Union Finance Minister mentioned, banks have surpassed it.
We have to come together. Professionally we will go together,
after identifying the beneficiaries, will provide them with correct credit in a vertical
package, creating market linkage and we will be with you till the recovery. Our
certificate officers will do their job. Over the last few years the credit deposit ratio
for the State as a whole was below 50%, it has increased to 64% and the recovery rate also
has correspondingly increased by 5%.
For UBI 17% in CD Ratio is a gain point. Now along with the
agriculture and allied sector there is a pent up demand in the unorganized industry. In
the SME sector, Medium gets the loan in any case, but the Small sector does not. If we
just adopt the RBI Guideline, collectively we can do a good job.
I will draw your attention to the SHGs. They are a new force, a
force led by the women and no one can stop it. They are the savers and saving is really
done by the mothers and by the women-head of the family. So women are the best savers and
investors. It is for us to stand by them. If we do all these together, then these are the
actually potential areas .whether it is agricultural credit, whether it is SSI credit or
Self Help Group linkage; UBI is sometimes first, sometimes marginally second. Friends, I
want UBI to become first.
You have to compete, a fair and healthy competition with other
nationalized commercial banks. But there are private sector banks and also foreign banks.
I want you to compete and make them out. In my knowledge of economics if you look at the
history of economic development of 3rd world countries, the institution which plays the
most significant role, it is not the Share Market, it is the Development Bank. With social
view, UBI can uphold development banking. If you can do that I think not only you can
retain your market but also capture the market of foreign countries that have come to
capture our market. We want to serve our State and capture their market. That should be
the goal also keeping the common people's interest in mind. If you do that we will
respond. If you, according to your policy of RBI Guideline and Govt. of India's policy
move on this line, you are on the surge, upward surge - if you do that we will respond in
terms of Govt. Deposits and together we will make UBI a Bank of West Bengal also where the
Bank was founded; emotionally late B.K. Datta was associated with it. On this day we can
collectively take this pledge. With these words I thank all of you.
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