The Telegraph
Friday , December 7 , 2012
Since 1st March, 1999
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Bengal credit appetite grows

Calcutta, Dec. 6: Reserve Bank of India governor D. Subbarao today said the credit-deposit ratio — the proportion of credit banks lend out of the deposits mobilised — in Bengal had improved significantly in the past few years.

At a media briefing after a State-Level Banker’s Committee (SLBC) meeting in Calcutta, Subbarao said: “We had a meeting of the SLBC today where the finance minister of Bengal (Amit Mitra) was present. The credit-deposit ratio (CDR) in the state has improved significantly over the last few years. The CDR is targeted at 65 per cent in the current fiscal (2012-13) against 63 per cent last year. As on September 12, the regional banks under the RBI have said the CDR has improved and they are on track to achieve the target of 65 per cent. The banks have also agreed to take the CDR to 68 per cent in the next fiscal (2013-14).”

The CDR is not only an indicator of the health of the banking system in a state but also the demand for credit from all sectors, including agriculture and small and medium enterprises (SMEs). With banks in Bengal looking to increase credit flow to agriculture and SMEs, an improving CDR indicates that deposits mobilised in the state are utilised by creditors within the state.

Subbarao said the SLBC had identified eight districts where the CDR was less than 40 per cent. “In each of these districts, the CDR will be improved by 5 per cent by March 2013. These districts are Burdwan, Bankura, Birbhum, Purulia, Hooghly, Murshidabad, Nadia and North 24-Parganas. I would request the state government to give a compliance report on this by Christmas.”

The RBI governor said Bengal had last year lagged some other states in terms of linking banks to self-help groups (SHGs). “The banks have agreed that they would continue to provide credit to SHGs that had earlier borrowed and repaid. In addition, the banks will provide loans to 1.5 lakh more SHGs,” he said.

“Bengal’s public finances have been tight. The state government, central government and the RBI recognise this. The rate at which the state makes borrowings from the market is higher by 10 to 15 basis points,” Subbarao said.

After the SLBC meeting, Subbarao went to Writers’ and met the chief minister. “The RBI governor raised issues like lack of loans for agriculture and allied services, SMEs and SHGs and the lack of bank branches in Bengal,” finance minister Mitra said.