New Delhi, April 15 -- The credit-deposit ratio of banks in India is around 80% today. Should this be a concern? If the investment-deposit ratio is also considered, which is about 29%, the two together mean that for every Rs.100 raised as deposits, almost Rs.109 is being deployed as credit and investment. And there is a statutory liquidity ratio (SLR) requirement of 18%, which is counted as part of the 29% invested, and a cash reserve ratio requirement of another 4%. How do these numbers add up?

From the time India went for reforms in 1991-92 to around 2003-04, the average credit-deposit ratio was around 55% and the investment-deposit ratio 33%. This came to less than 90% together, even as SLR mandates were higher. Subsequently, the aver...