Flat credit growth by banks irks finance dept officials

CD ratio drops in the state

Banks in Odisha continue to maintain their lackadaisical demeanour in advancing credits in the state despite substantial increase in deposits in first nine months of the current financial year.

The advances by the banks have registered a lowly 1.09 per cent growth in the first three quarters ending December 2014, compared to the same period of the last financial year.

Total advances have increased from Rs 142,889.96 crore as on December 2013 to Rs 144,477.55 crore by the end of December 2014, registering an increase of Rs 1,587.59 crore. The incremental growth is meagre 1.09 per cent.

The ungenerous response of the banks is despite the fact that the deposits have risen by whopping 19.53 per cent till December last year. As per the latest data collated by the State Level Bankers' Committee, the deposits have surged to Rs 190,418.95 crore by this time compared to Rs 159,297.53 crore a year ago.

The credit deposit (CD) ratio of all banks in the state compressed to 75.87 per cent till December 2014 from 89.7 per cent achieved as on December 2013. The calculations are based on Thorat Committee recommendation (advances sanctioned outside the state and utilized in the state).

The dismal performance of the banks is due to increase in deposits and low growth of advance portfolio.

The CD ratio, basing on advance sanctioned and utilized in the state, is only 49.99 per cent.

Out of 30 districts, the CD ratio is more than 60 per cent in only five districts. These are Nayagarh (64.59 per cent), Sonepur (68.28 per cent), Boudh (81.09 per cent), Dhenkanal (83.41 per cent), Kalahandi (64.13 per cent) and Bhadrak (84.42 per cent). The CD ratio in nine districts Puri, Gajapati, Ganjam, Kandhamal, Kendrapada, Malkangiri, Sambalpur, Jagatsinghpur and Mayurbhanj is below 40 per cent.

Chief Secretary, GC Pati, speaking at the 138th meeting of the State Level Bankers' Committee (SLBC) said that the commercial banks are miser in extending loans.

In the first three quarters of the current fiscal, the deposits of commercial banks have increased by 20 per cent whereas it is 10 per cent for the state cooperative banks. But the commercial banks' credit outflow have grown by only five per cent compared to 12 per cent credit growth achieved by the cooperative banks, said Pati.

The CG ratio of commercial banks and cooperative banks in the state are 47.46 per cent and 119.90 per cent respectively.

Pati wanted to know the reasons for such lacklustre performance by the commercial banks in extending credit and suggested for partnerships with co-operative banks for channelising loans.

"Banks can introduce mobile banking facility to cover more and more unbanked villages to expand the outreach and actively partnership with the co-operative banks for improving the CD ratio," said he.

JK Garg, executive director, UCO bank, attributed the rise in deposits to the chit fund scam in the state.

"Due to the busting of the chit fund scams, the chit fund companies are not in good shape and the deposits are coming to the banks. There is need for increased credit deployment also," said Garg.

Development commissioner-cum-additional chief secretary, UN Behera expressed concern over low CD ratio, low credit flow to different sectors, high NPA (non-performing assets) and overdue percentage and less number of branch opening in unbanked gram panchayats. Finance minister, Pradip Amat and MSME minister, Jogendra Behera also spoke the occasion.