Abstract:
The low credit-deposit ratio of the scheduled commercial banks
in Kerala has been a subject of intense debate during the last decade or
so. Periodically, the state government would raise the issue, lash out at
the ‘negative attitude’ of the banks for the lack of development of the
state, the banks would counter it, and soon everyone would forget it. A
systematic discussion of the various dimensions of it has been lacking.
This paper makes a modest attempt to examine the issue. The C-D ratio
is a product of the ratio of number of credit accounts to deposit accounts
and the ratio of credit amount per account to deposit amount per account.
While Kerala reports one of the highest ratio of number of credit accounts
to deposit accounts, the credit amount per account is one of the lowest
–deposit amount per account is comparable to the all-India level- among
the states of India. The low credit amount is owing to the lack of credit
deployment in industry, trade and finance. In particular, the credit amount
per account in industry is very low largely because of higher share of
food manufacturing and processing, other industries, and constructionwhich report low amounts of credit per account everywhere in India- in
the total. Further, a comparison of the amounts per credit account in the
small-scale industries with industry as a whole suggests that most of the
industries in Kerala are no larger than small-scale industries. The smallscale industries in Kerala are also too small.
