Lower CD ratio in UP has another dimension: SBI chief

State Bank of India chairman Pratip Chaudhary on Wednesday said the lower credit deposit (CD) ratio in Uttar Pradesh would actually appear much higher, if another dimension was considered.

“When we talk about the CD ratio, we generally refer to the retail, agricultural and small loans only,” he told to Business Standard. To buttress his point, he said Indian Oil Corporation (IOC) had a 12 million tonne refinery in Mathura and National Thermal Power Corporation (NTPC) had a large power plant in Singrauli, which transacted their credit portfolio with banks in branches located outside the state.

“If we consider their credit lines alone, the CD ratio of Uttar Pradesh would be almost 68 per cent,” he added.

 

At present, the CD ratio in Uttar Pradesh is pegged around 48 per cent against the national average of 75 odd per cent. Reserve Bank of India (RBI) wants the banks to work towards improving the CD ratio of lagging states to at least 60 per cent.

Chaudhary further said sugar industry had good presence in Uttar Pradesh with the country’s top two sugar producers Bajaj Hindusthan and Balrampur having their factories in the state. Together, they control about 25 sugar units in UP. “While, Bajaj Hindusthan has its banking transactions done in Delhi, Balrampur deals with banks from its Kolkata office, although their projects are located in Uttar Pradesh.

If we consider their portfolios and other large companies, wherein the banks invest in their bonds, the credit-deposit ratio of Uttar Pradesh would be anywhere between 70 to 75 per cent,” he said.

However, he said the CD ratio in Uttar Pradesh needed to improve further vis-à-vis its Southern counterparts.