These days CD ratio does not sound music to the ears of bankers in coastal Karnataka.

In the banking terminology, CD (credit-deposit) ratio is the portion of assets (loans) created by banks from the deposits received.

One of the bankers in a recent district-level bankers’ committee meeting in Dakshina Kannada district said that the CD ratio of the banks in the three districts of coastal Karnataka – Dakshina Kannada, Udupi, and Uttara Kannada – is less than 50 per cent at the end of September 2012. The state-level performance was 74.33 per cent.

The decline in CD ratio in coastal Karnataka is attributed to the inflow of NRI money from Gulf regions to these districts.

A senior banker, who had worked in Goa before coming to Mangalore, observed that decline in CD ratio is not the case in coastal Karnataka alone. Even the banks in Goa are facing the same problem because of inflow money from NRIs.

At least in Dakshina Kannada district, the silver lining is that the growth in CD ratio is seen in rural areas and among cooperative banks. Because of their exposure to agriculture sector in rural areas, cooperative banks in Dakshina Kannada district recorded a CD ratio of 97 per cent till September-end. A private sector bank, which is known for offering good rate of interest to depositors, showed a CD ratio of only 27 per cent during that period.

Of the 481 branches of various banks in the district, 188 rural branches crossed a CD ratio of 68 per cent. It was 43 per cent in the case of 201 urban branches.

Bankers, who represent coastal districts at state-level meetings, said that low CD ratio masks all other performances of their regions at such meetings. It is to be seen how the bankers perform in the days to come.

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