Credit-Deposit Ratio

Recently, as per the Reserve Bank of India (RBI) data, the Credit-Deposit (CD) ratio of the Northern and Western Regions declined in 2022 while that of the North-Eastern, Eastern, Central and Southern Regions improved.

About Credit-Deposit (CD) Ratio

  • It is the ratio of how much a bank lends out of the deposits it has mobilised.
  • The credit-deposit ratio broadly means the ratio of assets and liabilities of the banks.
  • It indicates how much of a bank's core funds are being used for lending, the main banking activity.

Implication

  • The ratio helps in assessing a bank’s financial health.
  • If the ratio ....
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