Credit Deposit Ratio It is the ratio of how much a bank lends out of the

Credit deposit ratio it is the ratio of how much a

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Credit Deposit Ratio It is the ratio of how much a bank lends out of the deposits it has mobilized. It indicates how much of a bank’s core funds are being used for lending, the banking main activity. Credit Deposit Ratio is the proportion of loan assets created by a bank from the deposits received. The ratio gives the first indication of health of a bank. A higher ratio indicates more reliance on deposits for lending and vice versa. A very high ratio is considered alarming, indicating pressure on resources. Adequacy ratios force banks to raise more capital. In India, credit deposit ratio of over 70 per cent indicates pressure on resources. Table 1 Credit Deposit Ratio of PNB and HDFC Bank (in per cent) Year PNB HDFC
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International Academic Journal of Business Management, Vol. 5, No. 1, pp. 26-47. 33 2006-07 69.07 68.73 2007-08 71.79 62.94 2008-09 73.75 69.24 2009-10 74.84 75.17 2010-11 77.38 76.70 2011-12 77.39 79.21 2012-13 78.86 80.92 2013-14 77.38 82.49 2014-15 75.90 81.08 2015-16 74.55 85.02 Source: Annual Reports of PNB and HDFC Bank from 2006-07 to 2015-16 Table 1 presents the credit deposit ratio of PNB and HDFC bank from 2006-07 to 2015-16. The credit deposit ratio of PNB was 69.07 per cent in 2006-07 which shows an increasing trend till 2012-13. Further, there was a slight decline in CDR of PNB which finally stood at 74.55 per cent in 2015-16. In case of HDFC bank, the credit deposit ratio was 68.73 per cent in 2006-07 which shows an increasing trend during the entire study period and finally reached to 85.02 per cent in 2015-16.
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International Academic Journal of Business Management, Vol. 5, No. 1, pp. 26-47. 34 Figure - 1 Credit Deposit Ratio of PNB and HDFC Bank Source: Drawn from table 1 Graph 1 demonstrate credit deposit ratio of PNB and HDFC bank from 2006-07 to 2015-16. It is clearly evident from the graph that PNB maintains higher credit deposit ratio as compare to HDFC bank during the initial period of study whereas after 2011-12 HDFC Bank has high credit deposit ratio. To sum up credit deposit ratio of both the banks hence well, indicating they both full utilize their deposits to disburse advances. Capital Deposit Ratio This is commonly used statistics for assessing bank liquidity. Table 2 Capital Deposit Ratio of PNB and HDFC Bank (in per cent) Year PNB HDFC 2006-07 7.46 9.42 2007-08 7.40 11.41 2008-09 6.99 10.53 2009-10 7.11 12.85 2010-11 6.87 12.17 2011-12 7.33 12.13 2012-13 8.35 12.22 2013-14 7.95 11.84 2014-15 7.79 13.76
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International Academic Journal of Business Management, Vol. 5, No. 1, pp. 26-47. 35 2015-16 6.93 13.30 Source: Annual Reports of PNB and HDFC Bank from 2011-12 to 2015-16 Table 2 enumerates capital deposit ratio of PNB and HDFC bank from 2006-07 to 2015-16. The capital deposit ratio of PNB was 7.46 per cent in 2006-07 which shows a normal fluctuation during the study period and finally stood at 6.93 per cent in 2015-16. In case of HDFC bank, it was 9.42 per cent in 2006- 07 and shows an increasing trend till the year 2015-16 with a nominal percentage fluctuation in the year 2010-11 to 2013-14 during the study period. Figure - 2 Capital Deposit Ratio of PNB and HDFC Bank Source: Drawn from table 2 Graph 2 demonstrate capital deposit ratio of PNB and HDFC bank from 2006-07 to 2015-16. It is clearly evidence from the graph that HDFC Bank maintain higher rate of capital deposit ratio as compare to PNB during the entire study period indicating HDFC bank’s liquidity condition is sounder than PNB.
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