Banks will aim to improve their credit-deposit ratio in West Bengal to 68 per cent by the next financial year, said D Subbarao, governor of the Reserve Bank of India (RBI).
“We agreed last year that the credit-deposit ratio for the current financial year must be 65 per cent. We reviewed the situation. As of September, it has improved across the state for each of the banks operating here. For the next financial year (FY14), banks have agreed to take the credit deposit ratio to 68 per cent,” Subbarao told reporters.
The governor on Thursday met the chiefs of three Kolkata-based public sector banks (Allahabad Bank, UCO Bank and United Bank of India) and other senior bankers at a state-level bankers’ committee meeting.
The credit-deposit ratio of banks in West Bengal is estimated at 63 per cent.
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Subbarao said bankers identified 10 districts in the state, where the credit-deposit ratio is below 40 per cent. “We have agreed with banks that the credit deposit ratio in each of these districts will be improved by 5 per cent from the current level by March 2013,” he said.
During her meeting with Subbarao, West Bengal chief minister Mamata Banerjee agreed to preside over a meeting of district magistrates, bankers and executives of the RBI and National Bank for Agriculture and Rural Development (Nabard) to work out an action plan to improve the credit-deposit ratio in these districts.
According to Subbarao, West Bengal’s tight financial position has made market borrowing expensive for the state government.
“Public finance in West Bengal has been tight. The way we note this is through the coupon rate, strength of borrowing by West Bengal. The rate at which West Bengal is able to borrow from the market is 10-15 basis points above the all-state average,” he said.
West Bengal’s debt burden, according to the last Budget document, was Rs 2.08 lakh crore. The outstanding debt of the government is set to increase to Rs 2.26 lakh crore in the current financial year, making it one of the most indebted states in terms of tax to GSDP (gross state domestic product) ratio.
“I met the finance minister of the state (Amit Mitra) and he briefed me about what the state finance ministry is doing to improve the public finances of West Bengal,” Subbarao added.