Performance of commercial banks in Assam not up to the desired mark

Staff Reporter

Guwahati: The services offered by the commercial banks in the state are not up to the desired mark, as evident from the low CD ratio, poor banking network, and other factors.

According to official records, the credit-debit ratio as of March 31, 2023, was 55.8%, whereas the national average was 75.6%. The RBI guidelines stipulate that the benchmark CD ratio should be at least 60%. In FY 2022–23, an amount of Rs 2,11,370 crore was deposited in the scheduled commercial banks in the state. Against this deposit, the banks provided credit to the tune of Rs 1,13,840 crore. This clearly indicates the low rate of deposit mobilization as well as credit absorption in Assam, compared to the all-India level.

The Economic Survey, Assam for 2023–24 indicates that the distribution of bank branches across the districts shows that only 10 districts in the state have more than 100 bank branches. In other words, the banking network coverage is not up to par in the state. The low banking services in Assam are reflected in the high population coverage per bank branch. The average population served per bank branch in the state, as of March 31, 2023, is 10,221 against the all-India average of 9122 persons per bank branch. It may be seen that bank branches in Assam have to serve a larger population than the all-India average.

As of March 31, 2023, out of a total of 3053 bank branches in the state, 1428 are public sector banks, 864 are private sector banks, 468 are regional rural banks, 200 are small finance banks, 67 are cooperative banks, and 26 are payment banks. The number of scheduled commercial bank branches in rural areas is 1500, and in semi-urban and urban areas, it is 872 and 682, respectively.

According to the Survey, although the rural areas have their share of bank branches, the share of deposit and credit is higher for the semi-urban and urban bank branches. For credit disbursement, the share of rural branches was 23.1%, with semi-urban and urban branches sharing 29.9% and 46.9%, respectively. This is because the capacity to save and invest in rural areas of the state continues to be highly limited.

Commercial banks are the biggest financial intermediaries. These institutions cater to the credit needs of all sections of society as well as infrastructure projects. So, the scheduled commercial banks in the state should ramp up their performance regarding the CD ratio and network coverage. In fact, the performance of the banks regarding these yardsticks has shown a marked improvement due to the state government pursuing the matter in the last few years.

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