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| Orissa concerned over declining credit-deposit ratio of banks |
| BS Reporter / Kolkata/ Bhubaneswar Sep 05, 2009, 01:08 IST |
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The persistent decline in the credit-deposit (CD) ratio of banks in Orissa over the past few years is a disturbing trend and the banks need to take appropriate steps to improve this ratio.
This was pointed out by experts at the 118th meeting of the State Level Bankers' Committee (SLBC) held here.
“The CD ratio of the banks in Orissa has been continuously declining for the past three years. The CD ratio which stood at 79.51 per cent by the end of 2006-07 dropped to 73.9 per cent by the end of 2007-08 and has declined further to 64.42 per cent by the end of 2008-09”, said RN Senapati, principal secretary, finance department of the Orissa government.
“The CD ratio of banks in Orissa at 64.42 per cent is higher than the national average of 60 per cent. However, the banks need to analyze the reasons for the slide in CD ratio and take appropriate steps to improve the same ", he added.
The declining CD ratio is a cause of concern and the banks have to explore ways to improve this, concurred TK Mishra, Chief Secretary of the Orissa government.
Speaking on the occasion, Prafulla Ghadei, the state finance minister said, “There are banks in Orissa whose CD ratio is less than 60 per cent. They include Canara Bank, Punjab National Bank, Indian Overseas Bank, Syndicate Bank, Central Bank of India and Corporation Bank .”
S Sethi, deputy general manager, Reserve Bank of India (RBI)-Bhubaneswar, said there are six districts in the state where the CD ratio of banks is less than 40 per cent and this calls for greater efforts from the banks to improve credit flow.
According to SLBC, the decline in CD ratio can be attributed to higher growth in deposits compared to advances, implementation of the Agricultural Debt Waiver Scheme, softening demand for steel and less demand for credit in the aftermath of the global economic downturn.
Due to the implementation of the Agricultural Debt Waiver Scheme, banks in the state waived agricultural loans amounting to Rs 2437.09 crore.
Moreover, credit demand of the steel sector did not pick up during 2008-09 due to slump in the steel market in the wake of the financial meltdown.
The total deposits and advances of all the banks in the state stood at Rs 70,681 crore and Rs 45,537 crore respectively by the end of 2008-09.
Of the total advances, the priority sector advances was Rs 27,234 crore while advances to agriculture and SME (Small and Medium Enterprises) sectors stood at Rs 13,716 crore and Rs 5,416 crore by the end of the previous fiscal.
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