New Delhi: A number of banks in the country have clearly stated that if the government wants to extend banking services to villages and far-flung areas, it will have to provide additional funds for this.

Owing to shrinking of profit and increasing amount of NPAs banks are facing financial crunch.

An ambitious project to link 2.46 lakh villages with banks and opening accounts of around 8 crore poor can also face hurdles.

In a recently held meeting with the Secretary (Finance), the representatives of government-run banks gave their suggestions in this regard.

The representatives stated that if the government wants to achieve its targets, it will have to cough up over Rs 20, 000 crore.  Part of this amount is required to increase the capital base.

The government has set a target of providing banking facilities in 1, 11, 000 villages during the current fiscal and extending it to 1, 35, 000 more villages during the 2012-13 financial year.

Government run banks have been given a target to open 3.5 crore new no-frill accounts including providing  credit cards to around 74 lakh farmers during the current financial year.

The government also stated that the banks should mull a strategy to link villages having more than one lakh population to banking facilities.

However, banks cannot afford to spend huge amount from their internal resources. Low profits have been reported in the government-run banks during the last and present fiscal.

Meanwhile, a committee has been constituted under Finance Secretary to provide financial assistance to the banks.