CD ratio of banks in Punjab declines 2.1%

The ratio of semi-urban areas witnessed an increase of 5.61%.

The overall credit deposit ration (CD) of commercial banks in Punjab witnessed a decline of 2.1 per cent from 71.5 per cent as on September 2008 to 69.4 per cent as on September 2009. The fall suggests there has been decline in credit offtakes. The CD ratio of urban areas has witnessed a decline of 9.93 per cent, while the CD ratio of rural areas registered a decline of 1.51 per cent. However, the CD ratio of semi-urban areas witnessed an increase of 5.61 per cents.

The proportion of loans generated by banks from the deposits received is known as credit deposit ratio.

It is worth mentioning that there is statutory requirement to maintain CD ratio of 60 per cent. According to State Level Banker's Committee (SLBC) data, CD ratio in rural areas as on September 2008 was 50.52 per cent. It plunged to 49.01 per cent during September 2009, witnessing a decline of 1.51 per cent. The total deposits in rural areas as on September 2009 was Rs 29,247 crore while advances were Rs 14,334 crore.

Similarly, CD ratio in urban areas declined to 90.83 per cent as on September 2009, in comparison to 100.76 per cent in September 2008. The total deposits in urban areas was Rs 53,992 crore while the advances were to the tune of Rs 49,039 crore as on September 2009.

However, in comparison to rural and urban areas, CD ratio of semi-urban areas has witnessed an increase of 5.61 per cent. The total deposits in semi-urban areas was Rs 41,860 crore while advances were to the tune of Rs 23,385 crore as on September 2009.

There has been low offtake in credit in all areas including rural, semi-urban and urban areas of the state. The gross credit increased by Rs 10,468 crore from Rs 76,290 crore as at September 2008 to Rs 86,758 crore as on September 2009. But the growth during the period was 13.7 per cent as against an increase of Rs 14,182 crore or 22.8 per cent during the same period last year. The credit growth during the period October 2008-September 2009 was 14.1 percent, 25.1 per cent and 8.9 per cent in rural, semi urban and urban area respectively. However during the corresponding period last year the growth was 17.7 percent, 46.7 per cent and 16.7 per cent in rural, semi urban and urban area respectively.