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| Discriminatory Rural Credit Policy- Depriving Rs one lakh crore Credit to farmers - K.Ramasubba Reddy |
As of March 2009, C-D ratio of All Scheduled Commercial Banks in metropolitan centres was the highest (87%), followed distantly by rural centres (57%) and urban centres (56 %). The semi-urban centres recorded the lowest CD ratio at 50%. As of Mar 09, the credit-deposit (C-D) ratio of All Scheduled Commercial Banks stood at 73%. |
| As of Mar 09, rural deposits were Rs 3.65 lakh crore where as credit extended was only Rs 2.09 lakh crore. |
If the same Metro C/D ratio of 87% C/D ratio were maintained in rural branches, the rural advances would have been Rs 3.18 lakh crore instead of Rs 2,09 lakh crore. Thus a huge chunk of rural deposits to the extent of over Rs 1 lakh crore was diverted rural area to give loans in metro areas. This trend has been continuing for decades. This is inequitable and rural advances should be at least in the same C/D ratio of Metros. The farmers could have been saved from the clutches of the moneylenders charging high interest rate of 24% to 36% per annum. The additional Rs 1 lakh crore loans that could have been given for farming and running rural enterprises would have generated twice the income and more employment opportunities than when the same loan amount given to traders, realtors and NBFCs in Metros. |
One example starving credit to rural and semi-urban areas is given below. |
Deposits and Credit of Scheduled Commercial Banks- MAHARASTRA STATE
March 2009 (Rs. in crore) |
| |
No. of Offices |
% share in the total |
Credit-Amount |
% share in the total |
| Rural |
2118 |
29% |
14 301 |
1.56% |
| Semi-Urban |
1397 |
19% |
18 599 |
2.04% |
| Uraban/Metro |
3879 |
52% |
870 468 |
96.40% |
| Total |
7494 |
100 |
912,368 |
100 |
Source: RBI –Qtly Dep -Credit-Mar 09-Computed |
NOTE: Major chunk of credit to the extent of 96% of the total credit in the State is given in Metro agglomerations. A megre 4 % of the total credit is given in the rest of the vast track of Maharastra. |
The inevitable conclusion is that all wealth and prosperity is concentrated in metro. Other areas of Maharastra State are starved of credit and are left HIGH AND DRY.
The vast rural belt has only 29% of the bank branches, compared to All India average of 40% rural branches in total branches. Metro has more than branches at 50% of the total branches. |
