Diversion of Rs 1.60 lakh crore Rural /Semi-urban Deposits to Metros: K.Ramasubba Reddy
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Low Rural Credit Deposit Ratio
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Credit/Deposit ratios have been highly skewed and continue to be so as the data as on Sep 09 show. Bihar is once again at the bottom with the lowest C/D Ratio of 27% (Rs 24,688 crore) and Jharkhand’s rural credit deposit ratio is 32% (Rs 18,460 crore) followed by West Bengal and Assam at 38%. Similar region wise and state wise disparities are seen in semi-urban credit deposit ratio also. Rural credit deposit ratio is very low in Eastern Region (39%) and highest in Southern Region (91%). Tamilnadu, as always is the case, has the highest C/D ratio of 111% (Rs 282,785 crore). These trends are perpetuated perennially for decades without any correction.
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| Declining Trends in Number of Branches and low C/D Ratio of SCBs in Rural India- (Rs in Crore) |
|
| YEAR |
Number |
Of braches |
Credit |
Advances |
Deposits |
Deposits |
C/D |
Ratio% |
| |
Rural No |
% |
Rural |
% |
Rural |
% |
Rural |
All Areas |
| 1991 |
35,216 |
58 |
19,688 |
15 |
33,163 |
15 |
59 |
61 |
| 2001 |
32,640 |
48 |
54,431 |
10 |
1,39,431 |
15 |
39 |
57 |
| 2005 |
31,967 |
45 |
1,09,976 |
10 |
2,13,104 |
12 |
52 |
66 |
| Mar09 |
31,325
|
40 |
2,08,700 |
7.3 |
3,65,500 |
9.3 |
57 |
73 |
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Diversion of Rural and Semi-urban Deposits to Metros
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As of Sep 09, C/D ratio of All Scheduled Commercial Banks in metropolitan centres was the highest (83per cent), followed distantly by rural centres (58 per cent) and urban centres (56 per cent). The semi-urban centres recorded the lowest CD ratio at 50 per cent. The credit-deposit (C-D) ratio of All Scheduled Commercial Banks stood at 70 per cent.
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ASCB-Credit/Deposit Ratio –SEP 09 (Rs in Crore)
|
| |
Rural |
Semi-urban |
Urban |
Metro |
Total |
| Offices |
31,829 |
19,418 |
15,889 |
13,954 |
81,090 |
| Deposits |
384,181 |
560,327 |
853,029 |
2303,982 |
41,01,518 |
| Credit |
222,372 |
278,866 |
478,691 |
1901,970 |
2881,898 |
| C/D Ratio |
58% |
50% |
56% |
82.6% |
70.3% |
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Source: RBI Qtly Dep/Credit
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| Credit given out of deposits collected from rural and semi-urban areas continues to be less than the percentage of credit deployed in metro areas for decades together, resulting in continued diversion of deposits from rural and semi-urban areas for giving credit in Metro areas. |
If 70%, being the average C/D Ratio, of the deposits collected in rural and semi-urban areas were deployed there only , additional credit to the extent of Rs1.60 lakh crore would have been extended to Agriculture and small enterprises in rural and semi-urban areas generating additional employment and resulting in increased production. Instead, huge amount to the extent of Rs 3.70 lakh crore (as on Aug 09) was given to commercial real estate, NBFC, trade and credit cards whose marginal utility is lesser than real sector production and employment oriented activities.
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Regional Disparities
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Western and southern Regions top the list with C/D Ratio of over 85%. North-Eastern, Eastern and Central Regions are having low C/D Ratio of less than 50%.
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N1.Regon-wise Credit/Deposit Ratio as per Sanction- As on March 09-(%)
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| All India |
72.6 |
| Northern Region |
68.5 |
| North-Eastern Region |
35.8 |
| Eastern Region |
48.9 |
| Central Region |
44.8 |
| Western Region |
85.2 |
| Southern Region |
88.4 |
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| Source: RBI-TPB March 2009 |
Cii) States with lower C/D ratio have, by and large, lesser per capita income.
There seems to be correlation between State Credit/Deposit Ratio and State Per capita Income as the figures in the table below indicate. |
| State-wise variations in Bank Credit and Per Capita Income-Mar 09 |
S no
1 |
State
2 |
4
C/D Ratio % |
Per capita Income Rs. @ 4 |
% Share in credit*3 |
| 1 |
Bihar |
27 |
12,600 |
0.8 |
| 2 |
Jharkhand |
32 |
21,500 |
0.6 |
| 3 |
N.E States |
36 |
23,300 |
0.8 |
| 4 |
U P |
42 |
18,200 |
3.9 |
| 5 |
Orissa |
51 |
26,500 |
1.3 |
| 6 |
Chattisgargh |
53 |
29,600 |
0.7 |
| 7 |
M P |
57 |
18,000* |
2.0 |
| 8 |
W B |
61 |
32,000* |
4.9 |
| 9 |
Kerala |
60 |
42,000* |
2.9 |
| 10 |
Gujarat |
63 |
38,000* |
4.0 |
| 11 |
Haryana |
66 |
67,800 |
1.9 |
| 12 |
Punjab |
66 |
50,500 |
2.8 |
| 13 |
Karnataka |
77 |
41,000 |
6.9 |
| 14 |
Rajasthan |
80 |
27,300 |
2.6 |
| 15 |
Maharastra |
91 |
47,000* |
31.9 |
| 16 |
A P |
98 |
39,600 |
7.4 |
| 17 |
T N |
109 |
45,000 |
9.4 |
| |
|
|
|
|
| |
All India |
|
37,500 |
|
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| * Data as on March 08: Sources: RBI Qtly Dep Credit, CSO NAS 2009 |
| Decline in rural branches |
| As of Sep 09, number of Rural Branches was 31,829, semi-urban 19,418, urban 15,889, Metro 13.954 and total number of branches 81,090. Percentage of rural branches to total branches declined from 58% in1991 to 39% by Sep 09. Had at least 50% of the branches are opened in rural areas, the number of rural branches would have been 40,500; about 8,700 more branches would have been catering to the banking needs of the rural people The regional distribution of bank centres is highly skewed with seven north-eastern States together (Assam included) trailing a single State, Uttar Pradesh, by nearly a fourth. |
| Adverse effects of discriminatory rural credit policy |
| 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% |
879 468 |
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/urban 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 50% of the total branches. |
| KRSR/REV/200110 |
