Credit-deposit ratio crosses 50% in UP

The CDR in the state had long been hovering in the range of 45-48% over the last several years

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Uttar Pradesh has shot past the 50 per cent credit-deposit-ratio mark owing to robust advances by commercial banks.

The ratio in the state had long been hovering in the range of 45-48 per cent over the last several years.

In the third quarter of financial year 2012-13, the aggregate ratio of commercial banks in UP touched 54.34 per cent compared to 47.20 per cent in the previous quarter. During the third quarter of 2011-12, the ratio was 44.90.

Commercial banks in UP clocked advances growth of over 20 per cent vis-à-vis deposit growth of merely 4.66 per cent in the third quarter of the last financial year.

A low ratio indicates sluggish capital formation and investment capacity in an economy. Experts have maintained unless industrialisation picks up, the ratio would remain low.

Until December 31, 2012, total deposits and advances of commercial banks in the state were about Rs 4,98,799 crore and Rs 2,71,037 crore respectively. Currently, UP is home to over 12,600 bank branches comprising public sector, private sector, cooperative and regional rural banks.

The state has been urging the Reserve Bank of India (RBI) and commercial banks to take proactive steps towards improving the ratio in UP.

India’s aggregate ratio is over 75 per cent, while some states such as Tamil Nadu have a ratio of above 100 per cent. The RBI has mandated a minimum ratio of 60 per cent for all states.

The centre has already approved a road map to open 3,000 new bank branches in UP by March 2014 to reduce the banks-to-population ratio in the state from 16,000 to the national average of 13,000. This is aimed at speeding up financial inclusion, increasing the ratio, mobilising deposits and growing credit.

On March 29, Union Finance Minister P Chidambaram inaugurated 300 bank branches in UP of the targetted 3,000 new ones. He had termed the feat as “triple century in a cricket match”, since it was the largest number of bank branches ever opened in a single day in India.

UP is targetting growth of 8.5 per cent and investment of Rs 16.70 lakh crore (private and public investments of Rs 11.84 lakh crore and Rs 4.86 lakh crore respectively) during the current 12 th Plan (2012-17).