Credit-Deposit Ratio of Scheduled Commercial Banks According to Place of Sanction in India from 2004 to 2023, by State

The Credit-Deposit (CD) Ratio data for India from 2004 to 2023 reveals a complex and dynamic financial landscape that reflects the evolving economic health and banking practices across different regions of the country. At the national level, the all-India Credit-Deposit Ratio has shown remarkable consistency, fluctuating between 58.2% in 2004 and 75.8% in 2023, indicating a gradual but steady improvement in credit deployment across the banking system. This suggests an increasing capacity of banks to transform deposited funds into productive economic investments.

The regional variations are particularly striking. The Southern Region demonstrates the most robust credit ecosystem, with states like Andhra Pradesh showing an extraordinary trajectory. Andhra Pradesh’s CD ratio dramatically rose from 65.9% in 2004 to 144.7% in 2023, suggesting an aggressive lending environment and potentially high financial intermediation. Tamil Nadu also maintains a consistently high CD ratio, often exceeding 100%, indicating credit disbursement beyond local deposit bases.

The Western Region exhibits considerable financial dynamism, with Maharashtra and Gujarat maintaining CD ratios frequently above 90%. Maharashtra’s ratio, in particular, oscillates between 81.8% and 106.9%, reflecting a sophisticated and active banking sector. Conversely, the North-Eastern and Eastern Regions demonstrate more conservative lending practices, with CD ratios typically ranging between 30-50%, potentially indicating lower financial penetration or more cautious banking strategies.

Urban centres and economically advanced territories like Delhi and Chandigarh show interesting volatility, with CD ratios frequently exceeding 100%, suggesting they serve as significant financial intermediation centres. Interestingly, smaller union territories like Lakshadweep consistently maintain low CD ratios, rarely exceeding 10-11%, reflecting their limited economic scale.

The data also captures the impact of economic transformations, such as the creation of Telangana in 2014, which quickly established a robust CD ratio of around 100%. The national trend suggests a gradual but consistent improvement in credit deployment, potentially reflecting enhanced financial inclusion, economic reforms, and increasing banking penetration across India.

From a policy perspective, the data indicates that while overall credit deployment has improved, significant regional disparities persist, highlighting the need for targeted financial strategies that address different states’ and regions’ unique economic characteristics.