financial system in india is dominated by banks and so is the case in goa. in fact, goa leads in terms of development of banking in india. over time, the number of commercial bank branches in goa increased steadily from only 5 in 1962 to 459 by endjune 2011. there is a state cooperative bank and 7 urban cooperative banks with 136 branches. with a ratio of 3, 180 populations per commercial bank branch as against allindia average of 13, 270, goa has one of the best banking services in the country. the sectoral flow of credit reflects the structure of the economy and the demographics. the industrial sector accounted for the highest share in credit followed by personal loans and services. the industrial sector receives maximum credit reflecting continuing industrialization. goa, being one of the prime tourist destinations, the hospitality sector led services sector in attracting credit. the high per capita income level of the population reflecting greater borrowing capacity explains a high share of personal loans in the overall credit. however, credit flow to agriculture remained low, though 50 per cent of the population was still rural ( chart 2 ). bis central bankers ’ speeches while the share of agriculture in nsdp has reduced sharply over the years, goa is also known for its distinct agricultural products such as mangoes, cashew and grapes. a fading agriculture sector may not be a sustainable feature for balanced growth in a long - term perspective. therefore, concerted efforts need to be made to promote agriculture in the state. this also requires sustained credit flow to agriculture. the state government has made provision for subsidized farm loans and subsidy for acquisition of agricultural implements. this will also help increase the level of credit - deposit ( cd ) ratio in the state which is relatively low as compared with the all - india level. the c - d ratio of the state of around 30 per cent compared with about 75 per cent at the allindia level does not appear commensurate with its high level of economic development ( chart 3 ). the recorded c - d ratio, however, understates the extent of credit penetration for mainly three reasons. first, major industries such as pharmaceuticals and hotels source credit from their head office locations which are outside the state. hence, such credit flow does not reflect in the c - d ratio of the state. second, internal cash generation in industries such as tourism and iron - ore reduces institutional finance. third, with a substantial share of non - resident deposits, the deposit base is large which imparts

explore innovative structures of loans with a greater emphasis on group lending to minimize credit risk. eighth, in any plan for financial sector development, the physical presence of a bank branch is important. hence, all the stake - holders – banks, state governments and the reserve bank – need to work in close co - ordination for increasing banking penetration and improving the quality of banking services with greater use of technology. conclusion let me conclude. goa is the richest state in india with a strong potential as reflected in the growth acceleration in the latter half of the last decade. the challenge is to sustain this momentum which will require continued policy action and greater access to the formal financial sector. bis central bankers ’ speeches