Pvt banks lag on C-D ratio in AP

Achievement of RBI norms appears an uphill task

The private sector banks, which have 341 branches in the state, are lagging way behind others in meeting the Reserve Bank of India's stipulations related to the credit-deposit (C-D) ratio and priority sector advances (PSA) to net bank credit (NBC) ratio. This fact is borne by the figures released by these banks for the period ended September 30,2003.

The new private sector banks are doubtful of achieving the RBI-stipulated limits by the end of the current financial year.

All the private banks in the state put together have an average C-D ratio of 32 per cent and PSA to NBC ratio of 30 per cent on a deposit base of Rs 11,822 crore and Rs 3,822 crore advances portfolio.

According to the RBI stipulations, banks have to maintain CD ratio at 60 per cent and PSA to NBC ratio at 40 per cent.

Though there is ample time for these banks to make up for the deficiency in maintaining these ratios by the end of the current financial year, some of the banks would have to spend their full energies if they are to meet the norms.

Prominent among the banks that have failed to stick to the RBI norms, as on September 30,2003, are ICICI Bank (CD ratio at 9 per cent and PSA at 31 per cent), Global Trust Bank (C-D ratio at 24 per cent and PSA at 19 per cent) and IndusInd Bank (C-D ratio of 16 per cent and PSA at 13 pc).

Except Vysya Bank, which has 155 branches in the state and is the biggest private bank in Andhra Pradesh that barely maintains PSA ratio at 42 per cent, all the other private banks have their priority sector advances at below 40 per cent of their net bank credit.

One of the reasons why the private banks fail to meet the PSA ratio can be attributed to the concentration of their branch network in the urban and semi-urban areas.

For instance, Vysya Bank has more than 60 per cent of its branches in the urban and the semi-urban locations, while Karur Vysya Bank has 35 of its 43 branches in cities and towns.

Private banks working in the semi-urban areas fare poorly in maintaining the credit-deposit ratio. For the period ended September, the C-D ratio in the semi-urban areas stood at 58 per cent against the stipulated 60 per cent, while that of rural and urban areas hovered around 82 per cent and 78 per cent respectively.