Ghadai warns action against banks defaulting in C-D ratio

The Orissa government today came down heavily on the private banks having low credit-deposit (C-D) ratio in the state.

Stating that the trend is inconsistent with the state policy to expedite economic growth, he warned that the government will be forced to ask its agencies not to park funds with those banks whose C-D ratios are very low in the state.

“We wouldn’t hesitate to direct various government departments and agencies not to park their temporary surplus fund with the private banks having low C-D ratio”, said finance minister Prafulla Chandra Ghadai. Addressing the members of the State Level Bankers’ Committee (SLBC) today, Ghadai said, though the overall C-D ratio of the banks operating in Orissa was 65.21 percent, against the Reserve Bank of India (RBI) norms of 60 per cent, by the end of March 2010, this is not satisfactory.

Banks like Canara Bank (45.93 percent), Corporation bank (17.8 percent), IDBI Bank (25.36 percent), Punjab and Sind Bank (21.21 percent), State Bank of Hyderabad (15.05 percent), Syndicate Bank (32.5 percent), Union Bank (49.91 percent), Vijaya Bank (16.91 percent), Axis Bank (48.8 percent), ING Vysya Bank (12.09 percent), South India Bank (3.5 percent), Rushikulya Gramya Bank (41.48 percent), Punjab National Bank (47.28 percent) had a C-D ratio of less than 50 percent.

Similarly, banks like Bank of India (53.1 percent), Indian Overseas Bank (50.25 percent), Oriental Bank of Commerce (50.32 percent), ICICI Bank (50.62 percent) had a C-D ratio less than the national parameter of 60 percent. Ghadai said, the performance of a number of banks in the field of lending to agriculture, micro, small and medium enterprises (MSMEs) and DRI advance is un-satisfactory. The agricultural loans of ICICI Bank and Axis Bank stood at 10.02 and 7.2 percent of the total loans extended by them respectively. In this context, the minister urged the private banks to lend more to agriculture, MSME, handloom and handicrafts sectors.

Besides, he exhorted the banks to adopt the Banking Correspondent (BC) model for implementation of their financial inclusion plan. Speaking on the occasion, S K Goel, chairman-managing director (CMD), Uco Bank said, the state government should provide the required land for setting up rural self employment training institutes in the state.

R N Senapati, additional development commissioner (ADC) said, the decline in the CD ratio from 67.01 percent by end of December 2009 to 65.21 percent by the end of March 2010 is a cause of concern. Unless the C-D ratio improves, the required investment wouldn’t happen, he added.

It may be noted, the C-D ratio of all the banks operating in the state was 65.21 percent by end of 2009-10, compared to 64.42 percent in the previous fiscal.