Bhopal: State economy slid down after demonetisation, say bankers’ committee

Bhopal: The demonetisation has not boosted the state economy, which slid down after Prime Minister Narendra Modi introduced it last year. This is the conclusion of state level bankers’ committee.

At its meeting held in Bhopal in June 2017, the bankers’ committee found out that though the banks have more deposits, the loan seekers who want to start their business are few. The centre had introduced demonetisation of the currency note of Rs 500 and 1000 on November 8, 2016.

As per committee’s findings, the credit and deposit (CD) ratio of the state on June 30, 2016 was 72.10 percent and on June 30, 2017 it dropped to 69.84 percent. The fall in ratio of 2.26 percent has been primarily due to a fall of credit growth compared with deposit growth.

While deposits shot up by 17.49 percent during June-16 to June-17, credit grew by only 13.81 percent. During June-17, CD ratio of the state fell from previous quarter due to repayment of agriculture loan dues in cooperative banks. The loanees paid back their loan to the banks in post demonetisation months, the cooperative banks were the biggest beneficiaries.

Total advances of cooperative banks was Rs 31,719 crore during March-17, which reduced by Rs 8391 crore and stood at Rs 23328 crore during June-17 quarter. Advances of SBI also reduced by Rs 2464 crores during March -17 to June -17 quarter. The buyers of rural area kept their money in banks and also they reduced their loan taking practices. On the other hand, the semi urban and city people performed well as far as using their money and taking loan were concerned.

The state level committee also found that CD ratio of rural, semi-urban and urban centres was 84.45 percent, 70.91 percent and 65.83 percent respectively as on June 30, 2017. The deposits of semi-urban centres grew at the rate of 55 percent followed by urban and rural centres showing a year on year growth of 38 percent and 7 percent respectively.

The year on year growth of advances in rural, semi-urban and urban centres was 19 percent, 57 percent and 24 percent respectively as on June 30, 2017. Deposits in banks shot up in November and December 2016, which remained standstill with some petty fluctuations during June-17.

There are six districts in the state having more than 40 percent of CD rate. They are Dindori, Shahdol, Umaria, Mandla, Tikamgarh and Alirajpur districts.

As on June 30, 2017, the Credit Deposit (CD) ratio of all banks in the state stood at 69.84 per cent. Interestingly, the private banks have higher CD rates at 132.54 percent. The CD ratio of private banks was higher than other banks followed by cooperative banks with CD ratio 110.20 percent. For public sector banks and regional rural banks, the CD ratio stood at 60.32 percent and 58.66 percent respectively.