A big paradox is staring at Odisha. Despite being a backward State, hard-earned deposits made by people in scheduled commercial banks in the State were being routed to meet credit needs of developed States like Maharashtra, Karnataka, Gujarat, Tamil Nadu and Andhra Pradesh.
A whopping Rs 1.51 lakh crore worth deposit money went outside the State in 2016-17. Reason: Banks cannot sit idle with deposits as they are a liability on banks.
Sample this: As per RBI statistics 2017-18 released recently, total deposits mobilised by scheduled commercial banks in Odisha in 2016-17 were at a whopping Rs 2.45 lakh crore; whereas the credit sanctioned by them totalled to mere Rs 93, 400crore. The credit-deposit ratio of the State was estimated at mere 38 per cent in 2016-17, which is a good 3 percentage points below the eastern region average of around 41 per cent.
The credit-deposit ratio of the State was on downhill since 2010-11. The story doesn’t end there. If the credit-deposit ratio of State on the barometer of place of utilisation (which means the credit given was utilised in State) is taken into account, the ratio stood at around 40 per cent in 2016-17, down from a high of 92 per cent in 1990. This ratio too has been on downward slope since 2011-12. The eastern region average in this barometer was higher at 43 per cent.
An analysis of RBI statistics show that in Odisha of every Rs 100 deposited in rural and semi urban centres; only around Rs 40 was utilised in the State. Reason: The credit-deposit ratio in rural and semi-urban centres in the State were around 40 per cent only excluding the investments banks made in RIDF (Rural Infrastructure Development Fund). According to RBI, a credit-deposit ratio of 60 per cent is good economics.
While the State Government puts the onus on banks to ensure a rise in credit-deposit ratio of the State to 60 per cent, senior bankers here feel helpless as they say banks cannot go for credit shopping. There should be demand for loans and a viable economic environment is the essential trigger of loan demand in a State.
“Given the high rate of NPAs in agriculture, handloom and self-employment schemes in State, we play a hands-off approach now when NPAs are breathing down the neck of banking system,” explained a senior DGM of a nationalised bank here.
What is the solution thenIJ According to a senior official of banking division of RBI here, as the credit-deposit ratio of Odisha has been remaining very low for consecutive years, in such a scenario, the Odisha Government has to think of ways and means to channel the high investible amount within the State. The options are galore, he observed, and added that besides pumping more for the priority sector with a bit of handholding of such tailor-made projects, the State could also float special infrastructure bonds on the lines of RIDF and mop up the rural and semi-urban deposits .