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

The Credit-Deposit Ratio is a critical indicator of banking sector performance, reflecting how effectively banks utilise their deposits to provide loans and support economic activities across different regions of India. Over the two-decade period, significant regional variations and transformative trends emerge.The Southern Region consistently demonstrates the most robust and stable banking performance. States like Tamil Nadu and Andhra Pradesh have maintained impressively high C-D ratios, often exceeding 100%, which indicates these states are not just utilizing their deposits but potentially drawing additional resources to fund lending activities. Tamil Nadu, in particular, shows remarkable consistency, with its C-D ratio hovering around 110-120% for most of the period, suggesting a highly dynamic and credit-intensive financial ecosystem.

In contrast, the North-Eastern Region reveals the most challenging banking landscape. This region consistently exhibits the lowest C-D ratios throughout the period, typically between 33-52%. This suggests significant challenges in credit penetration, potentially stemming from geographical remoteness, limited industrial infrastructure, and lower economic development. States like Arunachal Pradesh and Meghalaya particularly struggle, with C-D ratios often falling below 40%, indicating substantial untapped financial potential.

The Northern and Western Regions show more dynamic and evolving banking scenarios. Rajasthan, for instance, demonstrates a notable trajectory, climbing from around 62.8% in 2004 to peaking at 100% in 2008 before stabilizing around 80-90%. The Western Region, particularly Maharashtra and Gujarat, maintains strong C-D ratios, typically 75-95%, reflecting their status as economic powerhouses with robust financial infrastructures.

The Central Region presents an intriguing picture of gradual but steady improvement. States like Chhattisgarh and Madhya Pradesh have consistently grown their C-D ratios, rising from around 45-50% in the early 2000s to 65-75% by 2023. This trend potentially indicates improving financial inclusion and increasing economic opportunities in these traditionally less-developed states.

Interestingly, the All India average is relatively stable, fluctuating between 72-79% throughout the period. This suggests a balanced national banking ecosystem despite significant regional disparities. The slight dips around 2009 (global financial crisis) and 2020 (COVID-19 pandemic) are notable, reflecting broader economic challenges.

Urban territories like Delhi and Chandigarh exhibit exceptionally high C-D ratios, often exceeding 100%, which reflects their concentrated economic activities and sophisticated banking ecosystems. However, their ratios have shown more volatility than state-level trends, potentially indicating more sensitivity to economic fluctuations.

The data also reveals the emergence of newer territories like Telangana, which appears in the later years with strong C-D ratios around 110-115%, highlighting the potential of newly formed states to quickly develop robust financial ecosystems. By 2023, while regional disparities persist, there’s a discernible trend towards more uniform and improved credit utilization across India. The gradual increase in C-D ratios for many historically underperforming regions suggests ongoing efforts towards financial inclusion and economic development.