Goa’s credit deposit ratio may not improve, feel bankers

NT NETWORK

PANAJI

Even with the state having the presence of a large number of pharmaceuticals and engineering companies, it has not helped in increasing the credit offtake, revealed bankers on Monday.

Reacting unenthusiastically to a statement from the local Reserve Bank of India (RBI) office on low credit-deposit (CD) ratio, bankers pointed out to a limited choice in lending. They said that the CD ratio in the state is unlikely to witness a significant improvement in the near future.

“None of the pharmaceutical factories located in Verna or other industrial estates take loans from local banks. Companies have their head offices in Mumbai or Gujarat where financing decisions are taken. The potential for corporate or industrial loans is limited despite the existence of major companies like Cipla, Sanofi,” said a public sector undertaking (PSU) bank official.

He said that the trend in the Goan CD ratio has been historically low and is not expected to improve. Most of the PSU banks are into gold loans and lending against deposits for business, he said.

During a public function on August 18, S T Kannan, general manager, Reserve Bank of India, Goa, said that the credit-deposit ratio in the state is perhaps the lowest in India standing between 28 per cent and 31 per cent. “The state should focus on more industrial activities, as mining has been severely affected, while tourism is also facing problems,” said Kannan, adding that Goa should aim for diversified local activities while ensuring environment protection.

However, bankers say that improving the CD ratio is tough when one considers either the industry or agriculture sectors. “Lack of clear land titles makes it difficult for us to extend agricultural loans above Rs one lakh although we are ready to finance agriculture,” claimed bankers.

To improve the CD ratio, banks are focussing on area-based lending in activities related to fisheries or tourism but even that is proving to be difficult. “Goans are naturally averse to taking bank loans,” according to bankers.

As on March 31, 2018, the average CD ratio of banks in Goa was only 31.0 per cent. Among large banks, lead bank, State Bank of India, had a CD ratio of 27.9 per cent while for Bank of Baroda the ratio was a dismal 10.6 per cent. Smaller banks such as the Syndicate Bank and Uco Bank have a CD ratio of only 19.5 and 13.9 per cent, respectively.

Private sector banks are slightly better in extending loans, with CD ratio of HDFC Bank at 37 per cent and ICICI Bank at 54.6 per cent. Private sector banks are aggressively pushing retail loans in automobiles, consumer goods etc.