State crosses 35% mark in credit-deposit ratio

PATNA: For the first time in several decades, banks' credit-deposit (CD) ratio in Bihar has crossed the mark of 35%, and stood at 36.51% in the first quarter of the current fiscal, ended June 30. However, this has been possible due to a change in the norm for computation of the ratio. But for this change, the ratio would still be 34.40%.
The state's 36.51% CD ratio is a tangible improvement over that recorded in the past five fiscals even under the Nitish Kumar government.The ratio was 33.81% in 2006-07, 32.35% in 2007-08, 28.96% in 2008-09 and 30.30% in 2009-10. In 2010-11, it was 33.99%, but this included the money utilized from Rural Infrastructure Development Fund (RIDF) of the National Bank for Agriculture and Rural Development (Nabard).
The latest CD figure of 36.51% has been reached at in accordance with the new guidelines of the Reserve Bank of India (RBI), which, in April this year, asked the bankers to take into account both the advances made to borrowers and the fund utilized under RIDF.
Earlier, the CD ratio used to be computed in terms of total deposits in banks and advances given to loan seekers in a financial year. As per the previous formula, the CD ratio of the state even in the current fiscal would be 34.40%, which, however, compares favourably with the last five fiscals.
"The improvement in the state's CD ratio has been achieved due to improved banking, business and other activities in the state," said deputy CM Sushil Kumar Modi, who, at the State Level Bankers' Committee (SLBC) meeting held on Thursday, reviewed the performance of the banks during the first quarter of the current fiscal.
He added that the total advances given by the banks in the 2005-06 fiscal was merely Rs 6,000 crore, which had increased fourfold to over Rs 25,000 crore in the 2010-11 fiscal.
While the deposits in various banks operating in the state, including commercial banks, cooperative banks and Regional Rural Banks (RRBs), stood at Rs 1.15 lakh crore on June 30 this year, the advances (credit) made were at Rs 39,670 crore. Moreover, Rs 2,440.59 crore had been pumped into the state under RIDF. The sum of the two comes to Rs 42,110.59 crore. Accordingly, the CD ratio comes to 36.51%.
The SLBC report presented at the meeting on Thursday added, " the CD ratio in the state may improve further if the state government utilizes the total amount sanctioned under RIDF, as only Rs 2,440.59 crore out of the total sanctioned Rs 4,906.85 crore has been utilized."