What is cd ratio ?

Hey, Just like you, I didn’t know what is CD ratio. Until one day I decided to ask my friend about it. She was nice enough to explain the meaning of the term and how important it is to bankers. The full form of the term is credit- deposit ratio. Keep reading to know everything I learned. What is CD ratio in banking ? It is a ratio that shows us the amount of money raised as a deposit and how much of the deposit has been given as a loan to the customers. For banks, a good credit-deposit ratio is between 65 and 75. I will give an example to help you understand better. If the CD ratio is 60, it showcases that out of every R100 that a private or public bank raises as deposits, it gives R60 as a loan. Banks also have to lend and compulsorily park R24 in government securities (SLR). They also have to lend/give R6 as cash (CRR) to the Reserve Bank of India. You can calculate the CD percentage with the following formula. Credit-Deposit Ratio = Total Advances * 100. Total Deposits. I also found out that the all-India credit-deposit ratio of private banks is 91.4 percent whereas, the CD ratio of public sector banks is 69.0 percent. This is all from my end on what is CD ratio. I hope your doubt has been cleared. Read more : How to check pending EMI on SBI credit card ? What is unbilled amount in credit card? How does rental property affect debt-to income ratio ?