If the CDR of NER is low, what it means is that savings of people in the region are going outside to finance investment elsewhere. This is unfair and strictly inadvisable. The savings in the NER should be used to finance investment here in the region. This requires responses both from supply and demand sides.
Our efforts have so far largely focused on the supply side. We must do much more to generate demand for credit. The state governments and the banks should work in partnership in this regard. The Reserve Bank will be happy and willing to promote this partnership for raising the absorptive capacity of states for institutional credit. 5.