Entrepreneurs in smaller cities have to depend on money lenders as they are not getting adequate credit from banks, industry body Assocham has said.
The average portion of loan-assets created by banks from the deposits received in 66 Tier-III cities was as low as 53 per cent, the chamber said, adding the credit deposit ratio in metro and other bigger cities was 92 per cent.
Raising concerns over the low credit penetration in small cities, the chamber – in a paper submitted to the Finance Ministry – urged policy makers that funds mobilised by banks in Tier-III cities should be channelised for development. As on December 2008, the total deposit size of 66 small cities was Rs 4,66,174 crore while the gross bank credit disbursements were Rs 2,48,674 crore, Assocham said.
The annual growth rate of credit is lowest in the Tier-III cities at 21.3 per cent, compared to Tier-I (33.3 per cent) and Tier-II cities (23.7 per cent), it said. Ludhiana ranked first, followed by Coimbatore, Nagpur, Tirupur, Raipur and Kanpur.