MUMBAI, Jan 1: Credit deposit ratio (CD), an indicator of the health of banking system, of Indian commercial banks has declined by about 4 per cent during September 1996-September 1997 period even as the total number of banks has gone up from 296 to 300. The CD ratio of 296 commercial banks as on September 1996 was 57.5 per cent when the total credit amounted to Rs 2,63,156 crore and total deposits was Rs 4,57,714 crore.CD ratio is an index of the health of banking system in terms of demand for credit in proportion to total deposit growth in the banking sector. A declining CD ratio implies that banking sector was flush with funds without any corresponding demand for credit affecting the bank's profitability in the long run as they have to pay interest to depositors without corresponding income from the credit outflow.The CD ratio has come down to 53. 7 per cent as on September 1997 even when the total credit increased to Rs 285,747 crores and deposits increased to Rs 531,815 crores, says the Reserve Bank of India (RBI) in its data on aggregate deposits and gross bank credit of scheduled commercial banks, released here on Thursday.The dip in CD ratio was accompanied by an increase in the total number of commercial banks from 296 to 300 during the period. However, the State Bank of India and its associates recorded 61.1 per cent credit-deposit ratio. The CD ratios were much lower for regional rural banks at 48.7 per cent and nationalised banks recorded 47.3 per cent.The metropolitan centres have recorded the highest CD ratio of 71.1 per cent followed by urban centres (43 per cent), rural centres (42.8 per cent) and semi urban centres (35.9 per cent).Among the states, Meghalaya recorded 41.2 per cent deposit growth rate, followed by Tripura, Jammu & Kashmir, Orissa and Himachal Pradesh at 24.6 per cent, 24.5 per cent, 24.4 per cent and 22.7 per cent.Meanwhile the bank credit growth was highest in Arunachal Pradesh followed by Delhi, Meghalaya and other states. Nineteen nationalised banks accounted for 55 per cent of the aggregate deposits collected on the last Friday of September 1997 (the first half). The share of the State Bank of India (SBI) and its seven associates in the aggregate deposits was to the tune of 25 per cent. The shares of other bank groups were- 7.2 per cent (foreign banks), 9.3 per cent (other scheduled commercial banks) and 3.5 per cent (regional rural banks).The top hundred centres- arranged according to deposit size accounted for 59 per cent of the total deposits. Similarly, the centres arranged according to the size of bank credit constituted 71.5 per cent of the total bank credit. The nationalised banks accounted for 48.5 per cent of the total gross bank credit while SBI and its seven associates contributed 28.4 per cent.
