Credit Deposit Ratio of Indian Banks have gone upto 78%. This is alarming and needs for recapitalisation. Moreover, Banks are facing NPAs in large corporate accounts despite CDR (Corporate Debt Restructuring). It is high time, Banks tighten the norms for new financing to large corporates based on Corporate and Personal Guarantee. It is observed that most of the Corporate Projects have little stake of the promoters. Instead of advancing loans, Banks should concentrate on sharing of information among themselves about large advances alongwith monitoring the service of these loans in concerted manner.

They should all steps to recover old dues, some of them already identified as loss assets. Active participation of Bank in releasing funds from dead stock has the potential of substantially adding to their profitability. This will help their Credit Deposit Ratio and Capital Adequacy Ratio.

In the meantime, Banks should encourage the small and medium enterprises with advances fully backed by security. The well-spread advances portfolio will also help Banks for independence from large business advances.