Banks help convert people’s savings into investment, which in turn creates employment, income and assets. The process of conversion is called credit creation in which banks lend money to businessmen, farmers and consumers who need loans and are creditworthy.
States with higher credit demand and more creditworthy people convert higher share of deposits into credit and have a high credit-deposit ratio. States with low credit-deposit ratios are those whose income, savings or both are higher than their investment needs — mostly the poor ones. India’s average credit-deposit ratio is 73.6