Chapter II

Deposits

2.12 The aggregate deposits of SCBs during 2001-02 (reported under Section 42(2) of RBI Act) registered a growth of 14.6 per cent (Rs.1,40,742 crore) as compared with 18.4 percent (Rs.1,49,274 crore) in 2000-01 (Table II.6). The accretion to deposits was primarily on account of time deposits, which increased by 15.9 per cent; this growth rate, was almost the same rate as that of 15.8 per cent (net of India Millennium Deposits) registered in the previous year. The steady accretion to time deposits with banks despite the downward movement in interest rates, reflect the 'safe haven' sentiments.

Table II.6: Important Banking Indicators - Scheduled Commercial Banks

(Amount in Rs.crore)
Item										Variations during		Variations during
							As on			the financial year		April - October 4+
					March 24,	March 23,	March 22,	Oct. 5,	Oct. 4,	2000	2001-	2001	2002
					2000	2001	2002	2001	2002 (P)	-01	02 (P)		(P)
1					2	3	4	5	6	7	8	9	10
										(3-2)	(4-3)	(5-3)	(6-4)
1	Total Demand and
	Time Liabilities @				9,48,358	11,33,480	12,72,174	12,15,548	14,31,909	1,85,122	1,38,694	82,068	1,59,735
2	Aggregate Deposits (a+b)				8,13,344	9,62,618	11,03,360	10,53,172	12,42,166	1,49,274	1,40,742	90,554	1,38,806
										(18.4)	(14.6)	(9.4)	(12.6)
	(a)	Demand Deposits			1,27,366	1,42,552	1,53,048	1,44,709	1,61,067	15,186	10,496	2,157	8,019
										(11.9)	(7.4)	(1.5)	(5.2)
	(b)	Time Deposits			6,85,978	8,20,066	9,50,312	9,08,463	10,81,099	1,34,088	1,30,246	88,397	1,30,787
										(19.5)	(15.9)	(10.8)	(13.8)
	2a	Certificate of Deposits			1,227	771	1,576	825	N.A.	-456	805	54	-
										-(37.2)	(104.4)	(7.0)
	2b	Aggregate Deposits			8,12,117	9,61,847	11,01,784	10,52,347	N.A.	1,49,730	1,39,937	90,500	-
		(Excluding Certificate of Deposits)								(18.4)	(14.5)	(9.4)
3	Borrowings from RBI				6,491	3,896	3,616	2,488	95	-2,595	-280	-1,408	-3,521
										-(40.0)	-(7.2)	-(36.1)	-(97.4)
4	Liability to Banks				53,838	77,088	53,902	56,378	61,748	23,250	-23,186	-20,710	7,846
										(43.2)	-(30.1)	-(26.9)	(14.6)
5	Bank Credit (a+b)				4,35,958	5,11,434	5,89,723	5,46,098	6,73,112	75,476	78,289	34,664	83,389
										(17.3)	(15.3)	(6.8)	(14.1)
	a.	Food Credit			25,691	39,991	53,978	50,202	53,226	14,300	13,987	10,211	-752
										(55.7)	(35.0)	(25.5)	-(1.4)
	b.	Non-food credit			4,10,267	4,71,443	5,35,745	4,95,896	6,19,886	61,176	64,302	24,453	84,142
										(14.9)	(13.6)	(5.2)	(15.7)
6	Investments (a+b)				3,08,944	3,70,160	4,38,269	4,12,502	5,05,007	61,216	68,109	42,342	66,738
										(19.8)	(18.4)	(11.4)	(15.2)
	a.	Govt. Securities			2,78,456	3,40,035	4,11,176	3,83,431	4,77,831	61,579	71,141	43,396	66,655
										(22.1)	(20.9)	(12.8)	(16.2)
	b.	Other Approved Securities			30,488	30,125	27,093	29,071	27,176	-363	-3,032	-1,054	83
										-(1.2)	-(10.1)	-(3.5)	(0.3)
7	Cash Balances (a+b)				62,749	65,202	68,647	73,210	72,147	2,453	3,445	8,008	3,499
										(3.9)	(5.3)	(12.3)	(5.1)
	a.	Cash in hand			5,330	5,658	6,245	5,880	6,500	328	587	222	255
										(6.2)	(10.4)	(3.9)	(4.1)
	b.	Balances with RBI			57,419	59,544	62,402	67,330	65,646	2,125	2,858	7,786	3,244
										(3.7)	(4.8)	(13.1)	(5.2)
Memorandum Items :
A	Credit-Deposit (CD) Ratio				53.6	53.1	53.4	51.9	54.2
B	Incremental CD Ratio				67.6	50.6	55.6	38.3	60.1
C	Reserve-Deposit Ratio				7.7	6.8	6.2	7.0	5.8
D	Investment/Deposit Ratio				38.0	38.5	39.7	39.2	40.7
E	Investment+Credit/Deposit
	Ratio				91.6	91.6	93.2	91.0	94..8
P Provisional. N.A. Not Available. + Corresponding day of the previous year.
@Excluding borrowings from RBI/IDBI/NABARD.
Note:			1. Figures in brackets are percentage variations.
			2. Incremental credit deposit ratio calculated as ratio of increase in credit to increase in deposit during the financial year.
			3. Constituent items may not add up to the totals due to rounding off.

2.13 During 2002-03 (upto October 4, 2002), aggregate deposits recorded a growth of 12.6 per cent (Rs.1,38,806 crore) as compared with 9.4 per cent (Rs.90,554 crore) in the corresponding period of the previous year. The increase was also primarily through accretion in time deposits, which recorded a growth of 13.8 percent which was substantially higher than the growth rate of 10.8 per cent registered in the corresponding period of the previous year.

Certificates of Deposit (CDs)

2.14 The outstanding deposits raised through issuance of CDs by SCBs which had declined from Rs. 1,042 crore as on April 06, 2001 to Rs.758 crore as on August 24, 2001 went up to Rs.1,007 crore as on August 23, 2002 and subsequently to Rs.1,236 crore as on September 20, 2002. The discount rates on the primary issuance of CDs also witnessed a declining trend during the same period. The range of discount rate which was 6.50 to 11.00 per cent as on April 06, 2001 declined to 5.00 to 10.00 per cent as on August 24, 2001 and further to 5.50 to 8.75 per cent as on September 20, 2002 (Appendix II.2). The typical discount rate on CDs (for three month maturity) also declined from 9.75 per cent as on April 06, 2001 to 8.00 per cent as on August 24, 2001 and further to 6.85 per cent as on August 23, 2002. The discount rate further softened to 6.20 per cent as on September 20, 2002 commensurate with the decline in the deposit rates.

Bank Credit

2.15 According to the data obtained under Section 42(2) of the RBI Act, during 2001-02, bank credit increased by Rs.78,289 crore (15.3 per cent) as compared with an increase of Rs.75,476 crore (17.3 per cent) recorded in the previous year. The deceleration in the growth rate was both in respect of food and non-food credit. While food credit increased by Rs.13,987 crore (35.0 per cent) as compared with an increase of Rs.14,300 crore (55.7 per cent) in the previous year, the increase in non-food bank credit was Rs.64,302 crore (13.6 per cent) as compared with an increase of Rs.61,176 crore (14.9 per cent). The credit-deposit ratio in terms of outstandings, moved up marginally to 53.4 per cent as on March 22, 2002 from 53.1 per cent as on March 23, 2001. Non-food credit adjusted for non-SLR investments of banks, including bills rediscounted with financial institutions recorded growth of 12.7 per cent to Rs. 6,17,650 crore as at end-March 2002 on top of a growth of 16.0 per cent in the previous year. The adjusted non-food credit-deposit ratio in terms of outstandings was 56.0 per cent as at end-March 2002 as compared with 56.9 per cent as at end-March 2001 (Table II.6 and Table II.7).

Table II.7:Scheduled Commercial Bank’s Investments in NonSLR Securities Issued by the Non financial Commercial Sector

						(Rs. crore)
Outstanding as on			March	March	March	March
			26, 1999	24, 2000	23, 2001	22, 2002
1			2	3	4	5
1. Commercial Paper			4,006	5,037	8,049	8,497
2. Investment in Shares issued by (a+b)			3,899	4,784	5,690	5,914
	a.	Public Sector Undertakings	867	876	1,342	1,587
	b.	Private Corporate Sector	3,033	3,908	4,348	4,327
3. Investments in Bonds/Debentures issued by (a+b)			40,470	51,587	62,105	66,589
	a.	Public Sector Undertakings	24,072	30,376	36,568	39,520
	b.	Private Corporate Sector	16,398	21,211	25,537	27,069
Total			48,376	61,408	75,844	81,000
Note:		Data upto March 2000 are based on information submitted by SCBs through Special Fortnightly Returns(SFR)VII. Subsequent data are based on Section 42(2) Return.

2.16 During 2002-03, (upto October 4, 2002) bank credit increased by Rs.83,389 crore (14.1 per cent) as against an increase of Rs.34,664 crore (6.8 per cent) in the corresponding period of the previous year. Food credit declined by Rs. 752 crore (1.4 per cent) as against an increase of Rs.10,211 crore (25.5 per cent) in the corresponding period of the previous year. The increase in non-food bank credit was Rs.84,142 crore (15.7 per cent) as against a modest rise of Rs.24,453 crore (5.2 per cent) in the corresponding period of the previous year. The sharp increase in non-food credit during the current financial year reflects the accounting effect of the impact of merger since May 3, 2002. On a year-on-year basis, bank credit increased by 23.3 per cent, while non-food credit increased by 25.0 per cent.

Investments

2.17 According to the data obtained under Section 42 (2) of the RBI Act, investments of SCBs in government and other approved securities continued to record a strong growth and increased by Rs.68,109 crore (18.4 per cent) in 2001-02 as compared to a rise of Rs.61,216 crore (19.8 per cent) in 2000-01. The high degree of market absorption of Government borrowings has led to the holding of Government securities by SCBs at 36.5 per cent of their net demand and time liabilities at end-March 2002, which is markedly higher than the statutory requirements of 25.0 per cent. The preference of banks towards government securities was primarily driven by lack-lustre credit demand.

2.18 During 2002-03 (upto October 4, 2002), investments of SCBs in government and other approved securities increased by a further Rs.66,738 crore (15.2 per cent) as compared with an increase of Rs. 42,342 crore (11.4 per cent) in the comparable period of 2001-02. The high growth in investments has led to an increase in the investment-deposit ratio (on an outstanding basis) from 39.7 per cent as on March 22, 2002 to 40.7 per cent as on October 4, 2002. On a year-on-year basis, banks’ investments increased by 22.4 per cent, with investments in government securities registering 24.6 per cent growth.

Total Flow of Resources to Commercial Sector

2.19 Investments by banks in Commercial Paper (CPs) shares/bonds/debentures of PSUs and private corporate sector along with bills rediscounted with financial institutions recorded a growth of Rs. 5,181 crore (6.8 per cent) during 2001-02 as against Rs.14,533 crore (23.5 per cent) in the previous year. Together with these investments, the increase in total flow of resources to commercial sector (excluding food credit) from SCBs amounted to Rs.69,483 crore (12.7 per cent) in the financial year 2001-02 as compared with the increase of Rs.75,709 crore (16.0 per cent) in the previous year. SCBs investments in instruments issued by financial institutions and mutual funds increased by Rs.1,598 crore during 2001-02 as compared with Rs.1,708 crore a year ago. Including resource flow through capital issues, GDRs and those by financial institutions (FIs), the aggregate resource flow to the commercial sector was Rs.1,42,082 crore during 2001-02 as compared with Rs.1,71,124 crore in 2000-01. During 2002-03 (upto October 4, 2002), such flows at Rs.1,01,448 crore were higher than the flow of Rs.50,152 crore in the corresponding period of 2001-02.

Commercial Bill Market

2.20 During 2001-02, there was some improvement in activity in the market for bills rediscounting. The outstanding amount of commercial bills rediscounted by commercial banks with various financial institutions (FIs) aggregating Rs.711 crore at the end of April 2001 was higher than that of Rs. 371 crore during the corresponding period of previous year. The outstandings which amounted to Rs.1,921 crore at end-September 2001 declined to Rs. 512 crore by end-September 2002 with some fluctuations in between.

Inter-bank Repos

2.21 During 2001-02, the weekly transaction volume (first leg only) in the repo market segment ranged between Rs.1,350 crore and Rs.13,578 crore. The volumes of repo transactions were, however, mostly in the range of Rs.3,000 to Rs. 9,000 crore, except during the months of January 2002 and March 2002, when the volume of transactions had crossed Rs. 10,000 crore. The amount transacted in this segment witnessed a spurt and touched Rs. 13,185 crore in the second week of January 2002. Generally, repo rates ranged 4.00 to 10.25 per cent during 2001-02, except for occasional high rates, particularly during the first week of April 2001, when it increased to 14.0 per cent due to temporary tightness in the market.

2.22 During 2002-03 (upto October 11, 2002), the weekly volume (first leg only) in this market has been range bound between Rs.6,429 crore and Rs.14,579 crore, with the rates prevailing between 2.50 to 9.20 per cent.

Rupee Derivatives

2.23 In order to facilitate hedging of interest rate risks and ensuring orderly development of the derivatives market, policy guidelines for forward rate agreement (FRAs)/interest rate swaps (IRS) were issued to SCBs (excluding RRBs), PDs and all-India FIs, allowing them to undertake FRAs/IRS as a product for their own balance sheet management and for market making purposes. To provide more flexibility for pricing of rupee interest rate derivatives and facilitate some integration between money and foreign exchange markets, use of "interest rates implied in the foreign exchange forward market" were permitted as benchmarks, in addition to existing domestic money and debt market rates.

2.24 There was sharp increase in the volume of FRAs /IRS market during 2001-02. Available data show that FRAs /IRS transactions, both in terms of number of contracts and outstanding notional principal amount, rose from 1,615 contracts amounting to Rs.22,865 crore as on April 6, 2001 to 4,379 contracts for Rs. 86,749 crore as at end-March 2002. During 2002-03, till September 20, 2002, transaction in this segment recorded 5,675 contracts for Rs. 1,31,898 crore. Although there has been a significant increase in the number and amount of contracts, participation continues to be restricted mainly to select foreign and new private sector banks and PDs. In a majority of these contracts, NSE-MIBOR was used as the benchmark rate. The other benchmark rates used include 3-month benchmark rate on Reuters, MIFOR, government securities yield for 1 year, primary cutoff yield on 364-day treasury bills, etc.

Term Money Market

2.25 The volume of transactions was quite low in this segment of the market, reflecting, in part, the inability of players to build interest rate expectations in the medium-term. Hence, there was a tendency to lock in for shorter periods. Secondly, while PSBs are generally in surplus, foreign and private sector banks are in deficit in respect of short-term resources. Since these deficit banks depend heavily on call/notice money, the surplus banks exhaust their exposure limit to them, thereby constraining the growth of the term money market. Thirdly, corporates' preferences for "cash credit" rather than "loan credit" generally force banks to deploy a large amount of resources in call/notice money market rather than in term money market to meet their demands. In addition to the exemption of term money of original maturity between 15 days and 1 year from CRR, the gradual phasing out of non-bank participants from the call money market, the stipulation of prudential limit on lending and borrowing in the call/notice money market for banks and PDs, and the full scale operationalisation of CCIL are expected to activate the repo and term money market.

2.26 The average outstanding volume of transactions in the term money market rose from Rs. 199 crore in May 2001 to Rs. 320 crore in July 2001, but subsequently declined to Rs. 65 crore in December 2001. Thereafter, it recovered to Rs. 118 crore in March 2002 with intervening fluctuations. During the year 2002-03 so far, the volume increased from Rs. 225 crore in April 2002 to Rs. 1,198 crore in August 2002, before declining to Rs. 224 crore in September 2002.

Sectoral Deployment of Bank Credit

2.27 The gross bank credit of select SCBs (covering major banks accounting for over 90-95 per cent of bank credit of all SCBs) recorded a growth of Rs.67,574 crore (14.4 per cent) during 2001-02 as against Rs.68,335 crore (17.0 per cent) in the previous year (Table II.8). Out of this amount, food procurement credit recorded a rise of 35.0 per cent in 2001-02, which was less than that of 55.7 per cent registered in 2000-01.  Reflecting the slowdown in industrial activity, growth in non-food credit slipped to 12.5 per cent in 2001-02 from 14.4 per cent in the previous year. This was mainly due to the deceleration in credit to industry (medium and large) to 5.8 per cent (Rs.9,487 crore) in 2001-02 as compared to 10.5 per cent (Rs.15,518 crore) in the previous year. Credit to priority sectors also witnessed a decelerated growth at 13.5 per cent as compared with 17.1 per cent in the previous year. The growth in credit to wholesale trade and 'other sectors' increased to 14.6 per cent and 21.9 per cent, respectively, in 2001-02. Within the ambit of ‘other sectors’, the share of credit to housing and other non-priority sector personal loans witnessed significant increases. In particular, housing loans, a component of other sectors, showed an accelerated growth of 38.4 per cent. Accordingly, the share of credit to housing increased threefold from 3.8 per cent in 2000-01 to 11.6 per cent in 2001-02. Secondly, in the face of slowdown in industrial activity, banks have aggresively increased the share of credit towards ‘other non-priority sector personal loans’. This has doubled over the same period from 4.9 per cent to 10.0 per cent. During the review period, the outstanding export credit decreased from Rs.43,321 crore as on March 23, 2001 to Rs.42,978 crore as on March 22, 2002, with a decline in its share in net bank credit from 9.3 per cent to 8.0 per cent. The decline in the growth of export credit largely reflected the slowdown in exports, which after having increased in US dollar terms by 21.0 per cent in 2000-01, declined by 2.2 per cent in 2001-02.

Table II.8:Sectoral Deployment of Gross Bank Credit by Major Sectors

(Amount in Rs.crore)
Sectors						March 24,	March 23,	March 22,	June 29,	June 28,		Variations during
						2000	2001	2002	2001	2002	Financial year		April-June
											2000-01	2001-02	2001	2002
	1					2	3	4	5	6	7	8	9	10
											(3-2)	(4-3)	(5-3)	(6-4)
I.	Gross Bank Credit (1+2)					4,00,818	4,69,153	5,36,727	4,74,954	5,50,855	68,335	67,574	5,801	14,128
	1. Public Food Procurement
	Credit					25,691	39,991	53,978	50,340	64,008	14,300	13,987	10,349	10,030
	2. Non-Food Gross Bank Credit					3,75,127	4,29,162	4,82,749	4,24,614	4,86,847	54,035	53,587	-4,548	4,098
	(A+B+C+D)										[100.0]	[100.0]
	A. Priority Sectors ##					1,31,827	1,54,414	1,75,259	1,53,499	1,70,949	22,587	20,845	-915	-4,310
											(41.8)	(38.9)
	(i)			Agriculture		44,381	51,922	60,761	51,664	60,707	7,541	8,839	-258	-54
											(14.0)	(16.5)
	(ii)			Small Scale Industries		52,814	56,002	57,199	53,405	55,579	3,188	1,197	-2,597	-1,620
											(5.9)	(2.2)
	(iii)			Other Priority Sectors		34,632	46,490	57,299	48,430	54,663	11,858	10,809	1,940	-2,636
											(21.9)	(20.2)
	B. Industry (Medium & Large)					1,47,319	1,62,837	1,72,324	1,58,841	1,78,199	15,518	9,487	-3,996	5,875
											(28.7)	(17.7)
	C. Wholesale Trade (other than					16,818	17,845	20,459	16,211	19,748	1,027	2,614	-1,634	-711
	food procurement)										(1.9)	(4.9)
	D. Other Sectors					79,163	94,066	114,707	96,063	1,17,951	14,903	20,641	1,997	3,244
	of which :										(27.6)	(38.5)
	(i)			Housing		14,100	16,143	22,346	16,851	26,983	2,043	6,203	708	4,637
											(3.8)	(11.6)
	(ii)			Consumer durables		3,855	5,566	7,015	6,587	6,864	1,711	1,449	1,021	-151
											(3.2)	(2.7)
	(iii)			Non-banking financial		7,178	7,810	9,653	7,589	10,628	632	1,843	-221	975
				Companies							(1.2)	(3.4)
	(iv)			Loans to individuals		2,146	1,697	1,520	1,463	1,615	-449	-177	-234	95
				against shares/bonds							-(0.8)	-(0.3)
	(v)			Real Estate Loans		1,644	1,766	2,596	1,978	2,627	122	830	212	31
											(0.2)	(1.5)
	(vi)			Other non-priority sector		15,409	18,064	23,402	18,969	22,737	2,655	5,338	905	-665
				personal loans							(4.9)	(10.0)
	(vii)			Advances against		18,876	19,942	21,243	19,449	21,419	1,066	1,301	-493	176
				Fixed Deposits							(2.0)	(2.4)
	(viii)			Tourism and tourism		900	996	1,540	1,183	1,687	96	544	187	147
				related hotels							(0.2)	(1.0)
II.	Export Credit					39,118	43,321	42,978	39,859	42,601	4,203	-343	-3,462	-377
	(included under item I.2)
III.	Net Bank Credit ( including					3,98,205	4,67,206	5,35,063	4,73,034	5,49,841	69,001	67,857	5,828	14,778
	inter-bank participation)
Memorandum Item :
Export Sector credit as % to NBC						9.8	9.3	8.0	8.4	7.7

##		:	The data in this statement may not agree with those quoted elsewhere in the Report as the data base are different.
Notes:			1.		Data are provisional and relate to selected scheduled commercial banks (49 banks in March 2001 onwards) which account for about 90-95 per cent of bank credit of all scheduled commercial banks. Gross bank credit data include bills rediscounted with RBI, IDBI, EXIM Bank, other approved financial institutions and inter-bank participations. Net bank credit data are exclusive of bills rediscounted with RBI, IDBI, EXIM Bank and other approved financial institutions.
			2.		Figures in brackets are proportions to variation in non-food gross bank credit.

Industry-wise Deployment of Credit

2.28 Industrial credit as a percentage of net bank credit declined from 46.8 per cent in 2000-01 to 42.9 per cent in 2001-02. The incremental credit to industrial sector decelerated to 4.9 per cent (Rs. 10,684 crore) in 2001-02 as compared to 9.3 per cent (Rs.18,706 crore) in 2000-01. Industry-wise, significant credit growths were observed in infrastructure (30.5 per cent or Rs.3,460 crore), chemical, dyes, etc. (8.0 per cent or Rs.1,923 crore), other textiles (12.0 per cent or Rs.1,443 crore), food processing (14.7 per cent or Rs.931 crore) and construction (26.0 per cent or Rs. 825 crore). However, 7 out of 26 industries showed decline in credit during 2001-02 and the important among these were: cotton textiles (decline of Rs.1,500 crore or -11.3 per cent), and petroleum (decline of Rs.252 crore or -2.2 per cent) (Table II.9).

Table II.9: Industry wise Deployment of Gross Bank Credit

(Amount in Rs.crore)
Sectors			Outstanding as on						Variations during
			March 24,	March 23,	March 22,	June 29,	June 28,	Financial year		April-June
			2000	2001	2002	2001	2002*	2000-01	2001-02	2001		2002*
1			2	3	4	5	6	7	8	9		10
								(3-2)	(4-3)	(5-3)		(6-4))
Industry (Total of Small,
Medium and Large Scale)			2,00,133	2,18,839	2,29,523	2,12,246	2,33,778	18,706	10,684	-6,593		4,255
1	Coal		1,126	1,034	1,409	866	1,647	-92	375	-168		238
2	Mining		1,240	1,303	1,593	1,230	1,502	63	290	-73		-91
3	Iron & Steel		18,799	19,406	20,042	20,100	19,905	607	636	694		-137
4	Other Metals and
	Metal Products		6,294	6,351	6,496	6,131	6,605	57	145	-220		109
5	All Engineering		23,069	23,397	24,199	21,443	22,654	328	802	-1,954		-1,545
	of which : Electronics		5,133	5,291	5,941	5,605	5,829	158	650	314		-112
6	Electricity		7,438	8,590	9,343	8,639	9,526	1,152	753	49		183
7	Cotton Textiles		11,682	13,244	11,744	12,547	12,396	1,562	-1,500	-697		652
8	Jute Textiles		894	844	737	737	724	-50	-107	-107		-13
9	Other Textiles		13,003	12,012	13,455	12,083	13,498	-991	1,443	71		43
10	Sugar		3,832	4,682	5,028	4,753	5,068	850	346	71		40
11	Tea		1,034	1,058	986	1,017	1,126	24	-72	-41		140
12	Food Processing		5,986	6,354	7,285	6,634	7,043	368	931	280		-242
13	Vegetable Oils and Vanaspati		2,958	2,876	2,729	2,702	2,637	-82	-147	-174		-92
14	Tobacco and Tobacco Products		993	963	861	840	966	-30	-102	-123		105
15	Paper and Paper Products		3,143	3,468	3,741	3,562	3,899	325	273	94		158
16	Rubber and Rubber products		2,063	2,195	2,246	2,245	2,204	132	51	50		-42
17	Chemicals, Dyes, Paints, etc.		23,440	24,065	25,988	24,711	25,778	625	1,923	646		-210
	of which :
	i) Fertilisers		4,577	5,233	5,463	5,002	5,531	656	230	-231		68
	ii) Petro-chemicals		6,185	6,115	6,663	6,020	6,707	-70	548	-95		44
	iii) Drugs & Pharmaceuticals		5,693	5,389	6,393	6,494	6,485	-304	1,004	1,105		92
18	Cement		3,624	3,842	4,224	3,702	4,467	218	382	-140		243
19	Leather and Leather products		2,664	2,764	2,852	2,956	2,688	100	88	192		-164
20	Gems and Jewellery		5,406	6,581	6,456	6,591	6,746	1,175	-125	10		290
21	Construction		2,736	3,175	4,000	3,449	4,308	439	825	274		308
22	Petroleum		8,969	11,572	11,320	7,674	12,976	2,603	-252	-3,898		1,656
23	Automobiles including trucks		4,028	4,409	4,454	4,300	4,474	381	45	-109		20
24	Computer Software		1,022	1,223	1,665	1,396	1,718	201	442	173		53
25	Infrastructure		7,243	11,349	14,809	11,160	15,310	4,106	3,460	-189		501
	of which :
	i) Power		3,289	5,246	7,373	5,426	8,207	1,957	2,127	180		834
	ii) Telecommunications		1,992	3,644	3,972	3,294	3,647	1,652	328	-350		-325
	iii) Roads and Ports		1,962	2,459	3,464	2,440	3,456	497	1,005	-19		-8
26	Other Industries		37,447	42,082	41,861	40,777	43,913	4,635	-221	-1,305		2,052
	Memorandum Item :
	Industrial Credit as proportion
	to Net Bank Credit		50.3	46.8	42.9	44.9	42.5

*		Provisional.
Note:		Data relate to selected scheduled commercial banks which account for about 90-95 per cent of bank credit of all scheduled commercial banks.

Bank Credit to Sick/Weak Industries

2.29 There has been a decline in the number of sick-SSI and non-SSI (sick/weak) industrial units financed by the SCBs from 3,07,399 as at end-March 2000 to 2,52,947 as at end-March 2001 (Appendix Table II.3).

2.30 The bank credit locked up in sick/weak industries, however, showed a rise of 9.0 per cent from Rs. 23,656 crore as at end-March 2000 to Rs. 25,776 crore as at end-March 2001. As a proportion of industrial credit, the bank credit locked up in sick industrial units marginally decreased from 11.9 per cent to 11.8 per cent during 2000-01.

2.31 Owing to certain extraneous circumstances, the operations of the wood and panel based industry in the north-eastern region have been adversely affected, resulting in closure of a number of units during the last four years. Considering the importance of this industry in the north-eastern region and with a view to enabling the industry to regain its financial health, it was decided that banks may extend financial assistance, by way of rehabilitation package as indicated by RBI to such of the manufacturing units in the industry which are considered potentially viable by the banks.

Survey on Export Credit

2.32 At the instance of RBI, the National Council of Applied Economic Research (NCAER), New Delhi, conducted a survey to obtain feedback on the simplification of procedures for export credit delivery as also to assess the level of exporters' satisfaction with bank services. The findings of the survey revealed that more than three-fourths of exporters are satisfied with the overall bank services relating to export credit delivery. Nearly one-fourth of exporters have perceived it as 'excellent' and more than half as 'good'.

Credit-Deposit Ratio

2.33 As per BSR data¹ , the credit-deposit (C-D) ratio of SCBs as on March 31, 2002 (as per sanctions)2 stood at 62.3 per cent as compared with 56.7 per cent as at end-March 2001. The total flow of resources, as reflected in the credit and investment to deposit (IC-D) ratio showed an increase (as per utilisation) for the northern, northeastern and western regions as at end-March 2001. The IC-D ratio was the highest for the western region (79.2 per cent), followed by southern (75.3 per cent) and northern regions (57.7 per cent), respectively (Appendix Table II.4).

Exposure Norms

2.34 Ceilings on exposure to single/group borrowers serve to limit credit risk in banks' portfolios and have been linked to capital funds of banks as reckoned for capital adequacy purposes. Effective March 2002, exposure limit for individual borrowers was lowered from 20.0 per cent to 15.0 per cent and for group borrowers, from 50.0 per cent to 40.0 per cent of banks' capital funds. This is in line with international best practices (Box II.1). For borrowers belonging to a group, exposure may exceed the 40.0 per cent by an additional 10.0 per cent (i.e., upto 50.0 per cent), provided the additional exposure is on account of extension of credit to infrastructure projects. The additional exposure of 10 per cent in group exposure limit has been extended to projects in all infrastructure sectors as defined in Section 10(23G) of the Income Tax Act, 1961. For the purpose of prudential exposure limits, foreign banks were allowed to reckon foreign currency loans deployed in India in their capital funds. Effective March 31, 2002, foreign banks were brought on par with Indian banks for the purpose of exposure ceiling based on the capital funds as reckoned for capital adequacy purposes in India. With this revised concept, a number of foreign banks exceeded the prudential exposure ceiling. To enable smooth transition the RBI allowed banks on a case-by-case basis, to continue with the existing level of exposure in excess of the limit upto March 31, 2003.