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NRI Deposit MACRO ECONOMIC PROFILE

1.84 Kerala has been the hub of NRI deposits in the country. Flow of deposits from non – residents
(NR) has been significant in 2013-14. NR deposits increased by a marked 41.84 per cent during
the year, from the level of ` 66,190 crore to ` 93,883 crore. This trend of NR deposits increasing
their share in the total deposit basket had actually begun in 2011-12. It became more pronounced
in 2012-13 and further continued in 2013-14.Thus the NR deposits now account for more than a
third of the total deposits in Kerala’s commercial banking system (Appendix1.44).The private sector
banks have mobilized major chunk of the NRI deposits followed by the State Bank of Travancore
(Appendix 1.45). Fig.1.11 shows the growth of Bank Deposits in Kerala including NRI deposit.

Fig 1.11
Bank Deposits in Kerala

year

Source: Central Statistical Organization and Department of
Economics and Statistics

Credit Deposit Ratio (CDR)

1.85 In early 2000, Credit Deposit Ratio (CDR) of the Public Sector Banks in Kerala was very low.
During this period, banks were reluctant to disburse loans for education, housing, self employment
etc for fear of growing Non-Performing Asset (NPA) in the Banking Sector. In view of effective
interventions by the Central and State Governments, bank managements were encouraged to extend
loans to needy groups by relaxing their policies. As per RBI data , credit of Public Sector Banks in
Kerala grew by 54.67 percent as on March 2014 (`1,88,243 crore), while aggregate deposits went
up to 87.34 per cent during the same period reflecting a fall in CD ratio from 82.03 in March 2013 to
67.73 in March 2014 (Appendix 1.46). & ( Fig:1.12). On the other hand, Credit Deposit ratio is low in
Kerala (67.73), unlike Tamil Nadu and Andhra Pradesh where the CD ratio is above 1, indicating that
banks in Kerala have idle funds for which there is inadequate demand. CD ratio in Kerala has been
increasing over the last three years. Despite that, during the current fiscal year, Kerala’s CD ratio is
lower than All India average. The fall in CD ratio was not only due to drop in advances by banks due
to fear of NPAs alone, but also signifies inactive absorption of credit by the economy.

Economic Review 2014