The Hindu Business Line : Credit deposit ratio picks up in Goa

THE declining trend in Credit Deposit (CD) ratio in Goa has been arrested successfully. The State-Level Bankers Committee (SLBC) under the leadership of State Bank of India revealed that it has gone up to 31 per cent from an all-time low of 28 per cent.

At its latest six-monthly review meeting, held under the Chairmanship of Mr A. Ramesh Kumar, General Manager, SBI, Mumbai, the SLBC observed that the ratio, which had declined to all-time low of 28 per cent on March 31, 2004, has improved to 31 per cent by March 31, 2005. A stagnating CD ratio has been the major concern of Goa's banks, which continue to mobilise huge deposits with an average annual growth of around 12-15 per cent.

SBI to hike annual credit plan: With a better performance on the CD ratio front, SBI has decided to hike the Annual Credit Plan (ACP) of the State for 2005-06 from Rs 585 crore to Rs 660 crore with allocations of Rs 60 crore for agriculture; Rs 200 crore for industry, while the ever-growing service sector will take the cake with Rs 400 crore. Yet another major decision of the SLBC was to change the basis of the annual credit plan.

Instead of the State ACP being prepared by SBI based on the inputs from member banks of SLBC, from year 2006-07, the ACP will be based on Potential Link Credit Plan (PLCP) prepared by the National Bank for Agricultural and Rural Development (Nabard). As such, the Nabard's PLCP will no more be a mere reference document but base document for annual credit plan of Goa. As a consequence, the ACP for 2006-07 is all set to go up to Rs 750 crore.

Mobilisation high, absorption low: On the CD ratio, the bankers here argue that what this State lacks was credit absorption capacity. They are invariably on the look out for "good bankable projects" in any sector. Moreover, they point out that the State's CD ratio could not be taken in isolation, as a very high annual growth of deposit mobilisation has been responsible to pull down the CD ratio.

The State's total bank deposits stand at Rs 12,631crore, of which, Rs 3,606 crore happen to be NRI deposits coming into banking system from a sizeable population of expatriates working particularly in Gulf countries. If taken as a ratio of purely the domestic deposits of Rs 9,025 crore to the Rs 3,953 crore of advances as on March 31, 2005, the CD ratio works out to a decent 44 per cent.

Moreover, the bankers also point out that in the case of major corporate customers, their credit limits are often granted outside the State but they are utilised in the State, like in the case of many big tourist resorts, MNC chains, and so on. Not withstanding the low CD ratio, which has hovered around 31-33 per cent for much longer time, and even declined to around 28 per cent in some years, Goa's per capita credit is found to be much higher than the all-India average per capita credit, say bankers.

Farm credit growing: As per SLBC figures, against all India figure of Rs 10,753 Goa's per capita credit was Rs 29,332 crore (as on March 31,'05). According to SLBC, the flow of credit to agriculture has been growing.

From Rs 32.02 crore in 2003-04, the credit has shot up to Rs 47.31 crore in 2004-05 (48 per cent) growth. In 2005-06, it would be Rs 55 crore, and for 2006-07, it was estimated to reach Rs 73 crore.

Banks in this State are often criticised for failing to lend enough to agriculture, while the bankers complain of poor credit absorption capacity in the economy.

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