New vistas for Indian banks

As low credit offtake dents earning, Indian banks are exploring fresh avenues to lend. This is the only way to avoid mispricing of risks

The credit deposit (CD) ratio of the Indian banking industry in the fortnight ending August 13 was 69.92. This means for every Rs 100 worth of deposits, the banking system has lent Rs 69.92.

Is this too low? A year ago, in mid-August 2020, the CD ratio was 72.06. The mid-August CD ratio is the lowest since the fortnight ending December 9, 2016, during the time of demonetisation, when it dropped to 69.29 per cent. Barring this aberration, in the past decade, since 2011, the CD ratio roughly varied between 72 and 78 (August 2013).

Under norms, for every Rs