127
on
utilisation
rather than
sanction
of bank credit
16
, but even such C-D ratios
have experienced sharp reductions between 1990 and 2000; overall only 36%
of the incremental deposits in rural areas in the whole of the 1990s have been
deployed in the very areas even after taking into account the net in-migration of
credit from outside the rural areas. The bank credit so migrated are truly those
of relatively large loan account holders. For instance, as of March 1990, the
number of extra loan accounts as per
utilization
as compared with
sanction
was 2,53,068 but they accounted for extra bank credit of
`
9,333.65 crore,
thus resulting in an average credit of
`
3.71 lakh per loan account for these
extra accounts. This contrasts with the average loan amount of just
`
5,708 per
account in a rural branch as per sanction. In fact, the average amount per loan
account migrated has further shot up from around
`
4.1 lakh to
`
5.5 lakh until
1998 to a range of
`
28.2 lakh to
`
34.3 lakh up to 2003 and to a range of
`
10.9
lakh to
`
19.8 lakh thereafter (Table 4.37). Second, in the 1990s, the incidence
of migration has got reduced in respect of rural branches but has again picked
up after 2005. This is a distinct sign of the policy of doubling of bank credit
giving rise to the phenomenon of credit being sanctioned in branches outside
the rural areas but appearing as utilized in rural areas. Third, the average
size of loans has risen to such an extent, as shown above, that the migrated
bank credit has completely lost its rural and semi-urban characteristics. Also,
net migration has occurred essentially from metropolitan branches of banks
(Annexure F). In view of the above, the C-D ratio of rural branches as per
utilisation cannot be characterised as high unless a detailed study on the nature
of loan accounts so migrating into rural areas is undertaken. This is particularly
so after 2005 when the policy of “doubling” of agricultural credit had begun to
be implemented. During this period, the C-D ratio of rural branches has shot
up from a range of 52% as per
sanction
to 60% to that of 75% to 107% as per
utilisation
(except in March 2011 when both showed a C-D ratio of just 33%).
Sanction and Utilisation Differences in Bank Credit at the States’ level too
A significant point to note in regard to inter-regional disparities in credit
flow is that the improvement that took place in narrowing the disparities during
the first two decades of bank nationalisation, has been reversed and that there
16
An innovative data set gathered in the RBI’s
Basic Statistical Returns
relates to the capturing
of the phenomenon of migration of bank credit from the place of
sanction
to the place of
utilization
. This is the distinction between C-D ratios based on
sanction
and
utilization.
kar and
Shetty, EPW, April 20, 2013.
