C-D ratios for the eastern States remain 15-35 percentage points below the national average of 80%. | Photo Credit: Getty Images

With targeted reforms, Eastern India has the potential to emerge as a key driver in the country’s growth journey, according to a CII-Deloitte report.

The report, ‘Financing eastern India’s growth engines’, noted that eastern India’s demographic strength (home to nearly 26 per cent of India’s population), resource endowment, and entrepreneurial energy make it a natural contender for driving India’s development goals.

However, the region has lagged in credit penetration due to low credit-deposit (C-D) ratios, high reliance on informal finance and limited sectoral bankability.

With a credit-to-GDP ratio of 33.1 per cent in FY25, well below the national average of 56.1 per cent, as per RBI and the Ministry of Statistics and Programme Implementation (MoSPI), the region reflects chronic under penetration.

Despite modest improvements, C-D ratios for the eastern States remain 15-35 percentage points below the national average of 80 per cent. This underscores chronic underutilisation of deposits.

Reliance on informal financing

The region’s lower ratios could be attributed to a less developed industrial base, low formal credit penetration, and a high reliance on informal financing. This divergence underscores the need for region-specific strategies to deepen financial inclusion and unlock economic potential.

Supply and demand barriers in eastern India cause a lag in credit penetration. Low branch density, underdeveloped digital infrastructure, and under-capitalised regional rural banks (RRBs) restrict access to formal financial services, particularly credit.

In FY25, the eastern region was home to 28,884 bank offices, (about 17 per cent of the total number of bank offices in India) highlighting persistent regional disparities in financial infrastructure.

Demand-supply mismatch

Referring to demand-supply mismatches, the report stated that mismatches are reflected in the potential-linked plan (PLP) and annual credit plan (ACP) gaps. Agricultural credit realisation remains limited (26-36 per cent), while MSME lending, although higher (42-106 per cent), is uneven.

Unless demand frictions and supply-side risk perceptions are addressed, eastern India has risks of being locked into a low-credit equilibrium despite steady deposit growth projected through FY30.

This situation may compel banks to enhance deposit mobilisation through competitive rates and innovative saving products to sustain long-term balance sheet stability.

By March 2025, 53 per cent of deposits were concentrated in metropolitan areas and urban centers, channeling funds for financing higher-yield projects in other regions. For eastern India, this persistent migration of savings capital out of the region results in local banks being left with shallow credit demand pipelines and entrenched perceptions of higher risk, effectively locking the region into a low-credit equilibrium despite steady deposit mobilisation.

NBFCs and fintechs

While banks remain cautious, NBFCs and fintechs are stepping up to bridge the gaps, especially in the MSME and consumer segments. By FY25, NBFCs accounted for 35-40 per cent of incremental MSME credit in eastern States – up from less than 20 per cent a decade ago (SIDBI-MSME Pulse, 2025). Fintechs, using alternative credit scoring and digital rails, are expected to double their regional market share by 2030, outpacing traditional banks in last-mile origination.

However, their growth is constrained by regulatory caps, the cost of funds and the absence of robust State-backed guarantees.

RRBs, which were designed to boost rural credit, remain undercapitalised and digitally lagging. Their C-D ratios averaged below 45 per cent across eastern States in FY2025, compared with southern RRBs, which operate at close to 70 per cent. Unless recapitalised and digitally enabled, RRBs will fail to serve as effective credit intermediaries.

Unlocking regional credit potential

For unlocking regional credit potential, CII-Deloitte suggested MSME cluster financing and supply-chain credit; agri-allied credit and insurance integration; digital origination and credit scoring; RRB recapitalisation & digital integration; and regional infrastructure corridors.

Going forward, eastern India’s C-D ratios may improve but are expected to remain 10-12 percentage points below national parity by 2030 unless structural reforms accelerate. With targeted interventions, the region could shift from a credit-deficit zone to a growth frontier critical for Viksit Bharat 2047.

CII-Deloitte suggested that eastern India’s growth hinges on transitioning from a deposit-surplus region to a dynamic credit engine. By embedding digital rails, simplified KYC, alternative scoring and ULI integration, formal credit access can scale significantly.

Retaining local savings through State guarantees, PSU recycling and bond frameworks is essential. Coordinated policy-market reforms must recycle local savings into productive lending, lifting C-D ratios closer to parity by 2030.

Coupled with MSME formalisation, land tenure instruments and infra-led lending, these reforms can modernise agriculture, boost competitiveness and generate jobs, positioning eastern India as pivotal to achieving Viksit Bharat @ 2047.

With coordinated reforms and targeted interventions, eastern India can shift from a credit-deficient zone to a growth frontier, driving entrepreneurship, modernising agriculture, and generating jobs for a more inclusive and resilient India.

Published on September 15, 2025