According to a report by CII and Deloitte, titled “Financing Eastern India’s Growth Engines,” eastern India holds significant potential to become a major catalyst in the nation’s economic development with targeted reforms. The report highlights that eastern India is home to nearly 26% of the country’s population, possesses rich resources, and displays considerable entrepreneurial vigor, making it a compelling candidate for advancing India’s growth objectives.
However, the region is facing challenges related to low credit penetration, evidenced by below-average credit-deposit (C-D) ratios, high dependence on informal financing, and a limited scope for sectoral bankability. The credit-to-GDP ratio in eastern India was reported at 33.1% for FY25, substantially lower than the national average of 56.1%, as indicated by the Reserve Bank of India (RBI) and the Ministry of Statistics and Programme Implementation (MoSPI). Additionally, the C-D ratios in eastern states lag behind the national average of 80% by 15-35 percentage points, reflecting chronic underutilization of deposits.
The slow progress in credit growth can be primarily attributed to a less developed industrial base and high reliance on informal financing. This situation highlights the necessity for region-specific strategies to enhance financial inclusion and unlock its economic potential. Factors such as low branch density, inadequate digital infrastructure, and undercapitalized regional rural banks (RRBs) further restrict access to formal financial services, particularly credit.
As of FY25, eastern India housed 28,884 bank offices, about 17% of the total in the country, underscoring ongoing regional disparities in financial infrastructure. The CII-Deloitte report noted that the demand-supply mismatches are evident in the gaps of potential-linked plans (PLP) and annual credit plans (ACP), with agricultural credit realization ranging between 26-36% and MSME lending fluctuating from 42-106%, but remaining inconsistent.
The persistent structural issues risk locking eastern India into a low-credit equilibrium, even as steady deposit growth is anticipated through FY30. In this scenario, banks may need to enhance deposit mobilization through competitive interest rates and innovative savings products to maintain balance sheet stability. By March 2025, it is projected that 53% of deposits will be concentrated in urban and metropolitan areas, redirecting funds to higher-yield projects elsewhere. This trend results in local banks struggling with shallow credit demand pipelines while grappling with perceptions of elevated risk, further entrenching the region in a low-credit situation.
Meanwhile, while traditional banks remain cautious, non-banking financial companies (NBFCs) and fintech firms are increasingly filling the gap, especially in the MSME and consumer segments. By FY25, NBFCs captured 35-40% of incremental MSME credit in eastern states, a significant increase from less than 20% a decade prior, according to SIDBI-MSME Pulse, 2025. Fintech companies, leveraging alternative credit scoring methods and digital infrastructure, are projected to double their market share in the region by 2030, outpacing traditional banks in last-mile lending. However, their growth is hampered by regulatory constraints, cost of funds, and the lack of robust state-backed guarantees.
Despite their intended role, RRBs, aimed at boosting rural credit, remain undercapitalized and lag in digital services, with average C-D ratios below 45% across eastern states in FY25, in contrast to southern RRBs that operate close to 70%. Unless recapitalized and enhanced digitally, RRBs will struggle as effective credit intermediaries.
To tap into the region’s credit potential, CII-Deloitte recommends strategies such as MSME cluster financing, supply-chain credit development, agri-allied credit and insurance integration, digital origination, credit scoring improvements, RRB recapitalization, digital integration, and the establishment of regional infrastructure corridors. Although eastern India’s C-D ratios may see some improvement, they are projected to remain 10-12 percentage points below the national average by 2030 unless structural reforms are expedited.
For eastern India to transition from a deposit-surplus area to a dynamic credit engine, steps must include embedding digital infrastructure, simplifying KYC processes, employing alternative scoring, and implementing unified lending initiatives. Retaining local savings through state guarantees, public sector unit recycling, and bond frameworks is crucial to recycling these funds into productive lending, thereby enhancing C-D ratios.
Alongside MSME formalization and land tenure reform, these actions are poised to modernize agriculture, increase competitiveness, and generate employment, establishing eastern India as essential to achieving the vision of Viksit Bharat by 2047. With coordinated reforms and targeted interventions, the region can progress from being credit-deficient to a growth frontier, fostering entrepreneurship, modernizing agriculture, and creating jobs for a more inclusive and resilient India.
Published on September 15, 2025.
