The Gazette of India
EXTRAORDINARY
PART I—Section I
PUBLISHED BY AUTHORITY
No. 206J NEW DELHI, SATURDAY, DECEMBER 23, 1967/PAUSA 3, 1889
Separate paging is given to this Part in order that it may be filed as a separate compilation.
MINISTRY OF FINANCE
(Department of Economic Affairs)
RESOLUTION
Newi" Delhi, the 22nd December 1967
Establishment- 0f National Credit Council
No. F. 4(43)-BC/67-—The Government of India have been considering lor some time the measures that nerd to be taken to align more closely the functioning of the banking and credit system of the country to the objectives and requirements of national economic development. The demand lor bank credit from various sectors of the economy has been growing more rapidly than bank deposits. In this context there Is an argent need lor an equitable and purposeful distribution of bank credit.
2. During the last 15 years, there has been considerable progress in the field of consolidating and strengthening the banking system, in widening the area of in- stitutional coverage of credit and adapting the organisation and functioning of the credit system to the needs of our developing economy. At the same time, the functioning of the Credit system has revealed significant gaps. There have been complaints that several sectors such an agriculture, small scale industry and ex- portT, whose importance is considerable from the point of view of their contribu- tion to national income generation, provision of employment opportunities, decen- tralisation of economic power and earning of foreign exchange, have not obtained
836 THE GAZETTE OF INDIA EXTRAORDINARY [PART I-SEG. I]access to credit to the extent needed owing to the overall shortage of bank resour- ces- The problem has now appeared in bolder relief with the prospective increase in demand for credit, both in range and depth, at a time when accretion of resour- ces to the banking system has been slowing down. There is, therefore, need to review periodically the quantum of credit resources that the economy legitimately needs and to plan the distribution of such credit expansion in conformity with the overall objectives of investment planning and considerations of national econo- mic policy, keeping in view, at the same time, the interests of the depositors.
3, Although the Reserve Bank of India has, in the past, been giving directions to the bank in order to regulatt credit policy, it is felt that it would be 01 advan- tage to have a forum where the relative claims for credit of different sectors could be discussed and priorities determined. In order to provide such a forum and to assist the Government and the Reserve Bank of India in the task of allocating credit among the different sectors jti conformity with the objectives of planning and considerations of national economic policy, Ihe Government of India has decided to establish a National Credit Council.
4, The main functions of the Council will be, periodically, to
(a) assess the demand for bank credit from the various sectors of the
economy;
(b) determine priorities lor the grant of loans and advances or for invest- ment, having regard to the availability of resources and requirements of the priority sectors, in particular agriculture, small-scale indus- tries and exports.
(c) coordinate lending and investment policies as between commercial and cooperative banks and specialised agencies to ensure the optimum and efficient use of the overall resources; and
(d) consider other allied issues as may be referred to it by tfie Chairman
or the Vice-Chairman.
5. The membership of the Council will not exceed twentyfive. The Deputy Prime Minister and Minister of Finance will be the Chairman and the Governor of the Reserve Bank the Vice-Chairman- Thqre will be three other permanent members, namely, Deputy Chairman, Planning Commission, Secretary, Ministry of Finance, Department of Economic Affairs and Chairman, Agricultural Refinance Corporation. The remaining twenty members of the Council, whose tenure will be for such period not exceeding three years as the Government may fix, will be appointed by the Government of India to secure, as far as possible, adequate re- presentation from the various sector, viz., the commercial banks, the co-operative sector, large and medium-scale industries, smal'-scale industry, agriculture; trade; including export trade and professional groups Including economists. The names of these members will be announced shortly,
6. The Council may also invite such persons as it may consider necessary, to participate in its deliberation;;. It will meet as often and at such places as may be determined by it but not less frequently than twice a year- The Reserve Bank will provide for the Council such secretariat and other assistance as may be neces- sary. The first meeting of the Council will be convened by the Reserve Bank Of India at the earliest opportunity.
7. Government trust that the de'ibcrations of the Council, composed as above, wilf result in broad agreements being reached on matters relating to credit policy and that the advice of the Council will help the Government, the Reserve Bank and the banking system as a whole in the discharge of their respective responsi- bilities in this field.
S. S. SHIRALKAR, Addl, Secy.