The Hindu Business Line : CD ratio remains low in Kerala, says Review

While the deposits in the State increased at an average annual rate of 18 per cent during the period between 1993 and 2003, the advances grew at an average annual rate of 16 per cent, according to the Economic Review brought out by the State Planning Board.

It is pointed out that the per capita deposit in the State was substantially higher at Rs 18,679 against Rs 12,450 at all-India level during the period.

Similarly, deposits as a percentage of the State income at current prices was 78.1 per cent in Kerala, while it was 57 per cent at the all-India level.

In the event, the CD ratio, which was 62.87 per cent in 1990, declined to 42.71 per cent in March 2002. There had, however, been a slight pick-up in the ratio to 45.47 per cent in March 2003 and again to 46.69 per cent in September the same year.

Among the various groups of banks, the highest CD ratio was recorded by the gramin banks (94.48 per cent), followed by the State Bank group (46.33 per cent), other nationalised banks (43.88 per cent), private banks (43.65 per cent) and foreign banks (37.97 per cent).

In spite of the low CD ratio, advances by commercial banks in the State increased reasonably well with the average annual growth being 15.1 per cent during the 19-year period between 1985 and 2003. During the last three years, the rate of growth further improved to 19.3 per cent.

The incremental advances, which remained relatively low till 1994, improved significantly from 1995 onwards and during 2001-03, the average incremental advances were at Rs. 3,689 crore.

In this respect, Kerala was very close to the rate of growth at the national level. While the bank credit in the country rose by 16.6 per cent, in Kerala the average growth was 15.1 per cent.

The advances as a percentage of net State domestic product at current prices ranged between 25 per cent and 40 per cent during 1985-2002 and this was higher than the all-India level. However, there was a decline during the nineties, while it was rising at the national level.