This article analyses the results of the survey on Debits to Deposit Accounts and Credit Accounts with Scheduled Commercial Banks (SCBs) for the year 2004-05 (April-March) conducted by the Reserve Bank of India. The purpose of the survey is to collect statistics on debits to deposit accounts with banks for working out the rate of turnover of deposit accounts, cash credit and overdraft accounts, which is also an important indicator of economic activity including changing structure of production processes in the country and also in the various regions/states during a given period of time. The evolution of the survey is presented in Annex-1.

Debits to deposit accounts of banks represent withdrawals made by account holders (depositors/ borrowers) in the form of cheques or in cash and also includes those made through Electronic Clearing Service (ECS), ATMs, Electronic Fund Transfer (EFT), Internet banking and other banking channels. Comparison of the total of such withdrawals for a certain period with the average balances held by the depositors in such accounts provides a measure of the extent to which depositors make use of the funds in their bank accounts for making payments.

The survey is conducted as a part of the Basic Statistical Returns (BSR) system and the required information is reported by a sample of selected bank branches under BSR-6. The periodicity of the survey, which was biennial up to 1999-2000, had been made quinquennial thereafter and accordingly, the current survey was conducted with 2004-05 (April-March) as the reference year. Out of 68,116 branches of SCBs, 10,154 branches were selected as per the sampling design explained below. Of the selected bank branches, filled-in schedules were received from 9,420 branches resulting in a response rate of 92.8 per cent.

The selected branches were required to report outstanding balances in current and savings

* Prepared in the Banking Statistics Division of the Department of Statistical Analysis and Computer Services. The previous article covering the period 1999-2000 was published in the July 2001 issue of the Reserve Bank of India Bulletin. The periodicity of the survey, which was biennial up to 1999-2000 survey, has since been changed to quinquennial.

accounts, approved limits in cash credit and overdraft accounts as on last Fridays of June, September and December 2004 and as on March 31, 2005. These branches also furnished information on total withdrawals from each of these types of accounts during each quarter of the reference year. Further, data on debits in cash (including those through ATMs) during the reference quarters, for these types of accounts were also made available by branches in the BSR-6. Data reported by the branches in BSR-6 exclude inter-bank transactions.

Data on outstanding deposits presented in the article relate to the averages of the estimated deposits as on the reference date of each quarter in the reference year. The limits of cash credit and overdrafts also refer to averages of different quarters. The turnover rate of deposit/credit account is worked out by dividing total debits charged to that category of accounts during the reference year, with average of the corresponding deposit/limits of the four quarters in the reference year.

The sampling design adopted for the survey is covered in Section II. Section III discusses an overview of the developments in the economy in general and payments system in particular, which have relevance in determining the turnover of bank funds. The detailed results of this survey for 2004-05 are delineated in Section IV. It also includes comparative position of cash debits vis-à-vis total debits for each of the account type according to population groups, bank groups and among major states. Highlights of the survey results are given in Section V.

The Survey has adopted the stratified sampling design for selection of branches of banks. The branch-wise data on aggregate deposits outstanding as on March 31, 2005 based on quarterly BSR-7 return, formed the basis for construction of the frame. All the branches of the SCBs in the country were first stratified into basic strata according to State/Union Territory, population group of the centre where bank branch was located, and bank group. The population groups are (i) rural, (ii) semi-urban, (iii) urban and (iv) metropolitan. Five bank groups, viz., (i) State Bank of India & its Associates; (ii) Nationalised Banks; (iii) Regional Rural Banks; (iv) Other Indian Scheduled Commercial Banks¹ and; (v) Foreign Banks, were considered for the purpose. Thereafter, each stratum was sub-stratified into 3 size classes (deposits up to Rs.25 crore, Rs.25 crore to Rs.100 crore and Rs.100 crore and above). Thus, 896 ultimate strata were formed. The branches in the strata of ‘Rs.100 crore and above’ size, were selected with certainty, while 10 per cent and 15 per cent samples, with a minimum of 3 branches in each stratum, were selected from the ‘up to Rs. 25 crore’ and ‘Rs.25 crore to Rs.100 crore’ size sub-strata, respectively, using Simple Random Sampling (SRS). Accordingly, the sample consisted of 10,154 branches of 275 SCBs.

The value and volume of transactions with banks, particularly debits to deposit and credit accounts and their respective turnover rate, are influenced by general macroeconomic conditions, developments in the payment system, banking habits, banking penetration and other social factors. This section presents a brief review of the macroeconomic scenario of the country, particularly with regard to developments and policies relating to country’s payment system covering the period from 1999-2000 to 2004-05, i.e., the period between the previous and current surveys. Data on selected indicators are presented in Table 1.

The real Gross Domestic Product (GDP) maintained a moderate to high growth over the period 1999-2000 to 2004-05 and registered a growth of 8.5 per cent during 2003-04 and 7.5 per cent during 2004-05. The services sector registered accelerated growth over the years and attained double-digit growth rate (10.2 per cent) during 2004-05. Although the growth of agricultural sector witnessed fluctuations, growth of industry remained healthy over the years. The Index of Industrial Production grew from 154.9 in 1999-2000 to 204.5 in 2004-05 and recorded growth rates at 7.0 per cent and 8.2 per cent during 2003-04 and 2004-05, respectively. The growth in Index of Agricultural Production, however, varied from –15.9 to +20.3 per cent during the period under review. Gross Domestic Saving (GDS) of the economy, as per cent of GDP at current market prices, increased from 28.9 per cent in 2003-04 to 29.1 per cent in 2004-05 whereas investment measured in terms of gross domestic capital formation improved to 30.1 per cent in 2004-05 from 27.2 per cent in 2003-04.

1 Other Indian Scheduled Commercial Banks refer to Indian Private Sector Banks.

branches at Rs. 1,234 lakh, followed by urban (Rs.421 lakh), semi-urban (Rs. 174 lakh) and the lowest at Rs. 35 lakh for rural branches in 2004-05. The average amount of approved limits of cash credit and overdraft per branch increased to Rs.655 lakh in 2004-05 as against Rs.234 lakh in 1999-2000. As regards savings deposits, the average amount per branch worked out to Rs.661 lakh at all-India level in 2004-05 compared to Rs.291 lakh in 1999-2000. The branch averages for various population groups relating to cash credit and overdrafts as well for saving deposits were in the same order, the highest being for metropolitan, followed by urban, semi-urban and rural branches.

The average debit amount per branch worked out at Rs. 26,926 lakh for current deposits, Rs. 5,638 lakh for savings deposits and Rs. 15,702 lakh for cash credit and overdraft accounts in 2004-05, and showed wide variations among different population groups. As expected, the volume of average debit per branch was the lowest for rural branches and in ascending order for semi urban, urban and the highest for Metropolitan branches. This scenario was observed for debits relating to current deposits, cash credit and overdraft, and savings deposits as well. In terms of average debits per branch, savings deposits were more active in rural areas compared to current and cash credit and overdraft accounts. In semi-urban, urban and metropolitan branches, average debits per branch in current deposits were significantly high compared to cash credit and overdraft accounts and savings deposits.

Metropolitan areas held 56.8 per cent of the current deposits and accounted for 81.6 per cent of the debits to these deposits in 2004-05, as against 53.9 per cent and 57.5 per cent shares, respectively, in 1999-2000 (Table 4). The shares of other population groups registered a decline, both in terms of amount outstanding and debits to these deposit accounts, in 2004-05 compared to the position in 1999-2000. The decline was rather steep in respect of share in debits particularly in the semi-urban areas, accounting for 4.0 per cent share in debits to current deposits accounts during 2004-05 as against 14.0 per cent share in 1999-2000.

The share of rural and urban areas in total approved limits of cash credit and overdraft accounts increased to 14.1 per cent and 24.9 per cent in 2004-05 from 5.0 per cent and 17.4 per cent during 1999-2000, respectively, while that of metropolitan areas declined from 66.6 per cent to 50.7 per cent. However, 82.5 per cent of the debits to such accounts in 2004-05 were concentrated in metropolitan areas compared to 62.9 per cent in 1999-2000. Semi-urban and urban population groups recorded decline in their respective shares in total debits from 11.3 per cent and 22.9 per cent in 1999-00 to 3.7 per cent and 10.4 per cent in 2004-05, respectively.

2. The data on deposits in current and savings accounts and approved limits in cash credit and overdraft accounts refer to the average of outstanding deposits/approved limits as on last Friday of June, September and December, 2004 and March 31, 2005 and are estimated based on a sample of 9,420 branches.

As regards savings deposits, the outstanding deposits recorded about 2.4 times increase in 2004-05 over 1999-2000 while debits to these accounts increased four-fold in the same period. Though the composition of savings deposits according to population groups did not exhibit any major variation during the two periods under review, the share of urban areas in total debits increased from 22.4 per cent to 31.4 per cent, while the shares of rural and semi-urban areas registered decline. The decline in the share of semi-urban areas in total debits was sharp from 21.5 per cent during 1999-2000 to 13.0 per cent in 2004-05 with compensating increase in the share of urban areas. Metropolitan population group accounted for about 41.3 per cent share in total debits in 2004-05, which remained almost around the same level as obtained in 1999-2000.

The turnover rate of current deposits increased in urban and metropolitan areas in contrast to declines in rural (from 20.8 to 19.6) and semi-urban (from 43.2 to 27.2) areas in 2004-05, compared to 1999-2000 (Table 5). The increase in metropolitan areas was significant from 45.2 in 1999-2000 to 130.0 in 2004-05 mainly on account of intense surge in debits compared to rise in average outstanding amount in Current deposits. There was a moderate increase in the turnover rate from 41.8 to 48.9 in urban areas in the corresponding periods (Chart 2).

The turnover rate for cash credit and overdraft limits declined for all population groups except the metropolitan areas where it increased from 13.7 in 1999-2000 to 39.0 during 2004-05 (Chart 3). The rate declined from 14.9 to 8.6 in semi-urban areas while in the urban areas the decline was more than 9 percentage points to 10.0 per cent in 2004-05 over that in 1999-2000. The combined turnover rate of current deposits, cash credit and overdraft accounts during the period under study increased significantly from 23.9 to 69.7 for metropolitan areas, and declined in rural areas (14.0 to 8.0), semi-urban (26.8 to 15.5) and urban areas (29.6 to 22.0).

In respect of savings deposits, there were improvements in the turnover rate of varying magnitudes ranging between 2.5 and 5.5 in 2004-05 compared to 1999-2000 for Rural, Urban and Metropolitan population

groups. Semi-urban areas recorded a marginal fall in turnover rate during the period (Chart 4).

Overall turnover rate covering deposits and approved limits under consideration improved to 29.9 in 2004-05 from 16.3 in 1999-2000. The rise in turnover rate was mainly contributed by metropolitan population group even after offsetting the decline in the rate from 13.6 to 9.1 in semi-urban areas and from 18.0 to 17.2 in urban areas during the corresponding period. Rural population group did record a marginal improvement in the rate from 6.6 to 7.2.

This section presents the turnover rates and average volume of business per branch according to bank

groups, viz., (i) State Bank of India (SBI) & its Associates, (ii) Nationalised Banks, (iii) Regional Rural Banks (RRBs), (iv) Other Indian Scheduled Commercial Banks (OSCBs) and (v) Foreign Banks. A non-bank entity, which was converted to a SCB with effect from October 11, 2004, is included in Nationalised Banks group. It, however, did not report any current or savings deposits, and cash credit and overdraft accounts during the period 2004-05.

The average amount of deposits/ approved limits and debits per branch was the lowest in respect of RRBs. It was the highest for Foreign Banks mainly operating in metropolitan and urban centres in 2004-05 (Table 6). Such feature also prevailed in 1999-2000. For Current deposits, average deposits and debits per branch was the highest for Foreign Banks, followed by OSCBs, SBI & its Associates, Nationalised Banks and RRBs. Though SBI & its Associates had an edge over OSCBs in average limit of cash credit and overdraft, average debits per branch for OSCBs at Rs.26,092 lakh was much higher compared to Rs.8,393 lakh for SBI & its Associates in 2004-05.

Savings deposits per branch was the highest at Rs.7,081 lakh for Foreign Banks, followed by SBI & its Associates (Rs.867 lakh), OSCBs (Rs.805 lakh), Nationalised banks (Rs.707 lakh) and the lowest for RRBs (Rs.193 lakh). Debits per branch in savings deposits also followed the same order except that OSCBs had higher debits per branch compared to SBI & its Associates in 2004-05.

The turnover rate for current deposits witnessed phenomenal rise in respect of Foreign banks and OSCBs from 40.1 and 54.8 in 1999-2000 to 263.3 and 167.2 in 2004-05, respectively. The rates for SBI & its Associates and RRBs declined to 45.8 from 49.4 and to 11.0 from 11.5, respectively, while it remained almost at the same level at 37.1 for Nationalised banks in the years under review (Table 7). The turnover rates for cash credit and overdraft accounts and also combined rate with current deposits, recorded decline in 2004-05 from 1999-2000 for the SBI & its Associates, Nationalised banks and RRBs. The combined turnover rates surged from 28.4 to 232.2 and from 30.3 to 85.9 for Foreign banks and OSCBs between 1999-00 and 2004-05 respectively. The decline for RRBs was from 8.3 to 4.9 during the period. The turnover rate for savings deposits increased for SBI & its Associates (from 5.4 to 8.6), OSCBs (from 10.4 to 17.4) and Nationalised banks (from 4.9 to 7.2) in 2004-05 over 1999-2000. The rates continued at the same level for RRBs and Foreign Banks in the two periods.

The overall turnover rate for all deposits and credit limits registered increase for all bank groups, except SBI & its Associates and RRBs for which it declined from

17.1 to 13.9 and from 4.4 to 3.8, respectively. For the Nationalised Banks, OSCBs and Foreign Banks the turnover rates stood at 14.7, 64.1 and 173.6 in 2004-05 as against 14.5, 24.6 and 24.6, respectively, in 1999-2000.

The turnover rates of current deposits in rural and semi-urban areas were 54.3 and 57.1 in the case of OSCBs in 2004-05, while it was in the range of 17.6 to 25.0 for the SBI & its Associates and Nationalised Banks (Table 8). Similarly, in the urban and metropolitan areas, OSCBs and Foreign Banks reported higher turnover rate for current deposits in the range of 101.5-118.3 and 203.2-239.2, respectively. The turnover rates were between 28.7and 72.9 for the SBI & its Associates and Nationalised Banks. The RRBs had substantially lower rates in all population groups.

As regards cash credit and overdraft accounts, the turnover rates for OSCBs and Foreign Banks were higher for all population groups than those registered by other bank groups in 2004-05. In the metropolitan areas the turnover rates were 10.5 for SBI & its Associates, 18.1 for Nationalised Banks, 33.7 for OSCBs and unusually high at 234.5 for Foreign banks.

In respect of savings deposits, the turnover rates in rural and semi-urban areas were in the range of 3.2-8.9 across the bank groups in 2004-05. In urban areas these were at 7.0 for SBI & its Associates, 9.4 for Nationalised banks and 24.4 for OSCBs. The rates in metropolitan areas were 19.6 for SBI & its Associates and 20.1 for OSCBs, while Nationalised banks registered lower turnover rate of 6.0. Foreign banks reported lower rate at 5.5 in urban areas and 8.0 in metropolitan areas.

The combined turnover rates for all deposits and credit limits in the rural areas, OSCBs had the highest rate at 15.8 followed by Nationalised Banks (9.3), SBI & its Associates (4.6) and RRBs (3.1) in 2004-05. In the semi-urban areas, OSCBs reported turnover rate of 15.7, while SBI & its Associates and Nationalised Banks had turnover rates of 8.8 and 8.5 respectively. In urban areas, the turnover rates for SBI & its Associates and Nationalised Banks were in the range of 12.1-13.2; the OSCBs and Foreign Banks had higher rates at 39.3 and 54.0, respectively. The overall turnover rates in metropolitan areas were substantially high for Foreign Banks (178.3) and OSCBs (86.8) whereas SBI & its Associates and Nationalised Banks had rates far below at 24.2 and 19.4, respectively, in 2004-05.

The four major metropolitan centres (viz., Kolkata, Chennai, Mumbai and New Delhi) had combined shares of 40.8 per cent, 37.1 per cent and 20.2 per cent in the total current deposits, cash credits and overdraft account limits and savings deposits, respectively, in 2004-05,

while their share in total debits to current deposits, cash credit and overdraft accounts and savings deposits was higher at 68.7 per cent, 69.7 per cent and 68.7 per cent, respectively, during 2004-05 (Tables 9 and 10).

Mumbai centre, alone, accounted for 48.2 per cent of all-India debits to current deposits and 49.4 per cent of all-India debits to cash credit and overdraft limits (Table 10). New Delhi shared 12.8 per cent and 13.6 per cent of the all-India debits to current deposits, and cash credit and overdraft accounts, respectively. The other 2 major metropolitan centres had relatively lower shares in the range of 1.7- 4.9 per cent in the all-India debits to current deposits and cash credit and overdraft accounts.

The turnover rate of current deposits was the highest for Mumbai (217.7) compared to 152.2 for all Metropolitan centres together, while it was the lowest for Chennai at 70.6. New Delhi and Kolkata reported 96.8 and 86.2 turnover rate for current deposits. The turnover rate of cash credit and overdraft accounts, in Kolkata (22.3), Chennai (12.7) and New Delhi (34.3) were lower than the combined rate of the four major metro centres (45.1) whereas Mumbai registered a high rate of 62.2 (Table 9). Consequently, the combined rate for current deposits, and cash credits and overdraft accounts in Mumbai worked out to 112.4 compared to 80.8 for four major metropolitan centres; the rates were in the range of 34.8-57.0 for the other 3 centres. Similarly, for the savings deposits as well, Mumbai scored over other centres and registered a turnover rate of 23.3, whereas other centres reported rates in the range of 4.1-8.0 and all major metropolitan centres together had turnover rate at 12.5 for savings deposits in 2004-05.

The turnover rate of current deposits in 2004-05, among states, was observed to be the highest in Maharashtra (190.3), followed by Delhi (96.4) and Gujarat (95.2) while all other states had turnover rate lower than all India rate. As regards cash credit and overdraft accounts as well, Maharashtra reported the highest rate (54.3) while Delhi followed distantly with turnover rate at 34.3. The combined turnover rate for current deposits, cash credits and overdrafts for Maharashtra stood at 99.5 and Delhi at 56.9 (Table 11). In respect of savings deposits, the turnover rates were low. The states with high rate of turnover were Maharashtra (19.0), Bihar (including Jharkhand) (12.2) and Haryana (10.8). Maharashtra reported the highest turnover rate for all deposits and credit limits at 77.3 followed by Delhi (39.4), against the all India rate at 29.9. Among the states, Maharashtra, Delhi, Bihar (including Jharkhand), Gujarat, Haryana, Jammu and Kashmir, Karnataka, Orissa, Tamil Nadu and West Bengal reported increase in the aggregate turnover rates in 2004-05 compared to 1999-2000.

The overall turnover rate for all deposit and credit limits, in rural areas were high in Uttar Pradesh (17.4), Gujarat (13.9) and Karnataka (12.3), while in Semi-Urban areas, Maharashtra (18.5) and Goa (17.6) reported high turnover rates. Jharkhand (61.7) and Maharashtra (33.0) had substantially higher turnover rates in Urban areas in 2004-05 (Statement 1). Maharashtra with overall turnover rate at 85.8 stood far ahead of other states in regard to overall turnover rate in metropolitan areas, in 2004-05.

In rural areas of states like Karnataka (32.6), Andhra Pradesh (12.6), Uttar Pradesh (10.7) and Manipur (10.3), the Savings deposits’ turnover rates remained higher than the All-India average while in the semi-urban areas, Maharashtra had substantially high turnover rate (14.8). Jharkhand (75.2) and Orissa (22.0) reported substantially high turnover rate for such deposits in urban areas. Maharashtra’s turnover rate for savings deposits in metropolitan areas at 22.0 was about two times the all-India rate.

The combined turnover rates for current deposits, cash credit and overdraft accounts in 2004-05 were high for SBI & its Associates in Gujarat (43.0) and Haryana (42.3), while Orissa (42.4), Karnataka (40.7), Jharkhand (32.9) and Delhi (30.2) reported high rates in respect of Nationalised banks. In the case of RRBs, turnover rate for such deposits/credit limits was the highest in Manipur (12.2) followed by Maharashtra (10.9) as against 4.9 at all-India level. The OSCBs reported high turnover rate

in Gujarat (152.2) and Maharashtra (137.0) in respect of current deposits and cash credit and overdraft accounts, while Foreign Banks in Maharashtra (382.5) and West Bengal (245.5) had above all- India turnover rate (232.2) in 2004-05.

The overall turnover rate for all deposits and credit limits for SBI & its Associates was substantially higher than all-India rate (13.1) for Maharashtra (31.8), Haryana (23.1) and Gujarat (22.5). In the case of Nationalised banks high rates were observed for Jharkhand (45.4) and Karnataka (29.6) while Mizoram (1.8) and Himachal Pradesh (2.1) reported the lowest rates among the states (Statement 2). Manipur (18.1), Maharashtra (11.1), Andhra Pradesh (7.5) and Karnataka (7.1) registered high turnover rates in respect of branches of RRBs in 2004-05. Maharashtra and Gujarat with turnover rates of 115.6 and 107.9, respectively, emerged as the States with high turnover rates in branches of OSCBs, while Uttaranchal (9.8) and Jammu & Kashmir (11.7) appeared at the other end of the spectrum for this bank group. Maharashtra with turnover rate of 306.4 was the only State having above all-India average (173.6) turnover rate for Foreign Banks in 2004-05. Dominance of bank groups in turnover rates in states might be attributed to presence of their branch network and related banking activity.

This section presents, at broad levels (i.e., population groups, bank groups and major states) comparison of turnover rate for cash debits with total debits for current and savings deposits, and cash credit and overdraft accounts in 2004-05. This feature was introduced in 2004-05 covering debits made in cash, including those through ATMs, therefore, comparable data for 1999-2000 are not available.

At the aggregate level of deposits and credit limits under consideration the share of cash debits stood at 8.0 per cent to total debits in 2004-05 (Table 12). In the case of current deposits, 4.4 per cent of the total debits were estimated to be in cash, while cash debit accounted for 5.8 per cent in the case of cash credit and overdraft accounts. Resultantly, 4.9 per cent of the debits to current deposits and cash credit and overdraft accounts, which are predominantly used for economic activities, were in cash during 2004-05. As expected, the share of cash debits in total debits for savings deposits, which are predominantly used by households for meeting payment requirements, stood substantially higher at 30.6 per cent.

At the aggregate level for current and savings deposits, and cash credit and overdraft accounts, the turnover rate for cash transactions worked out to 2.4 in 2004-05 as compared to overall turnover rate of 29.9 for all transactions. The turnover rate for cash debits to current deposits is estimated at 4.0 as against rate of 90.5 for total debits to these accounts. For cash credit and overdraft accounts, the turnover rate for cash debits was 1.4, while for current deposits and such credit limits combined, the cash debit turnover rate was 2.2; as against rates of 24.0 and 44.8 for total debits during 2004-05. Savings deposit accounts had cash debits turnover rate at 2.6 against the total turnover at 8.5.

The cash debit turnover rate in 2004-05 for current deposits was the highest for semi-urban areas at 7.2, followed by urban (5.3) and rural (4.9) areas. It was the lowest at 2.7 for metropolitan areas for these deposits (Table 13, Chart 5). In rural and semi-urban areas about one-fourth of total debits to current deposits were in cash, while the shares of cash debits for urban and metropolitan areas were lower at 10.8 per cent and 2.1 per cent, respectively. The above-observed feature, in general, revealed that use of cash for making payments is inversely related to level of urbanisation. This feature was also observed for combined deposits and credit limits.

The cash debits turnover rate for cash credit and overdraft accounts was 4.0 in rural areas and 0.6 in metropolitan areas. Bulk (66.7) of debits to cash credit and overdraft accounts in rural areas occurred in cash,