BELGAUM: Former Executive Director of the Reserve Bank of India H.B. Shivamaggi has suggested that NABARD explore the possibilities of direct lending and thereby enhance its role in the country's financial system.

He was addressing a gathering after inaugurating a seminar on "Indian Financial System-Reforms and Developments" sponsored by the University Grants Commission and organised by KLE Society's Lingaraj College here on Saturday.

He said though NABARD was essentially a development bank, it could venture into direct lending.

"If you are avoiding direct lending, it means you are avoiding risks," he said. The credit need of small cultivators in rural areas was not being met by national and cooperative banks but by private money-lenders. The time had come for the Government to make private money-lenders a part of the country's financial system to check exploitation.

Dr. Shivamuggi criticised the "discriminatory" approach towards customers by almost all banks in the country that collected interest on loans on a monthly basis while disbursing it on a quarterly basis on deposits.

There was great potential for all financial institutions, including the Grameen banks, to make the country's financial system relevant to the majority of the people and to boost the rural economy.

Later, Nilanjan Banik from the Institute of Financial Management and Research, Chennai, delivered the keynote address.

Those present on the occasion included Lingaraj College Principal Basawaraj Jagajampi. The inaugural session was followed by technical sessions, group discussions and paper presentations.

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