SBI Conclave 2022 : Credit Deposit Ratio

November 24, 2022 Credit-deposit ratio This refers to the report "Govt spending, excess SLR to support loan growth : SBI chief" (The Hindu Business Line, November 24). India is one of the first developing countries to recognise the potential of the banking system in playing a proactive role in nation building. SBI chief's optimistic revelations about the functioning of the banking system post-pandemic are soothing and comforting. By involving state machinery and non-government organisations in credit planning at every level from State to villages since early 1960's, ensuring adequate credit flow to priority sectors and monitoring Credit-deposit ratios India ensured an even spread of economic growth across geographies. It is unfortunate that, of late, this aspect of the role played by banks in India's economic growth doesn't get the attention it deserves. The signal in the SBI chief's observations that banks can stand where they are even with lagging deposit growth is disturbing. There should be disincentives for keeping excess SLR beyond a threshold limit and for keeping idle resources even outside the banking system. That's one way to ensure reasonable return on investment of individuals' savings. Banks should also be encouraged to improve branch network in underbanked areas and maintain adequate professional staff for fieldwork and monitoring of credit. The neglect of HR issues in banks also contributed to the blame about NPAs and write offs in PSBs. M G Warrier Mumbai

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