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| Bank credit shrinks by Rs 38,913 cr |
| BS Reporter / Mumbai Jul 29, 2010, 00:08 IST |
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After rising on huge demand from telecom players, bank credit dropped by Rs 38,913 crore during the fortnight ended July 17.
According to the data by the Reserve Bank of India (RBI), bank credit grew by 21.27 per cent on a year-on-year basis at the end of the fortnight. Outstanding bank credit stood at Rs 33,63,477 as against Rs 34,02,390 crore in the previous fortnight. This is first decline over the last two months.
“Credit growth is likely to be moderate during the second quarter, but it will be more or less aligned to RBI's expectation for the year. The first quarter saw a very high credit growth, this was partly due to the telecom license payments,” said Shikha Sharma managing director and CEO of Axis Bank at a conference in Kolkata.
The central bank has projected 20 per cent growth in credit for the current financial year.
In the first quarter review of the monetary policy RBI said that as against the budgeted amount of Rs 35,000 crore, the actual realisations under 3G and BWA auctions were about Rs. 1,06,000 crore, resulting in an increase in receipts by over one per cent of GDP.
Deposits mobilised by banks dropped by Rs 40,867 crore during the fortnight. On a year-on-year basis deposits grew by 14.55 per cent to Rs 45,91,836 crore during the fortnight ended July 17, 2010. Demand deposit or CASA dropped by Rs 37,735 crore while time deposit dropped by Rs 3,132 crore during the fortnight.
Despite low deposit mobilization, banks’ investments in government securities or instruments that qualify for statutory liquidity ratio went up by Rs 8,542 crore. Banks generally park the surplus fund after meeting the credit demand of the system.
“The credit off take has to become more broad based, It will happen as project loans which most banks have sanctioned but not disbursement picks up,” Chanda Kochhar MD and CEO of ICICI Bank had told reporters yesterday after the policy announcement.
| CRAMPED CREDIT |
Fortnight-
ended |
Credit
flow |
Y-o-Y
growth |
Deposit
mobilised |
Y-o-Y
growth |
| 9 April ’10 |
826 |
17.00 |
43,501 |
16.00 |
| 23 April ‘10 |
-26,483 |
17.13 |
-23,327.90 |
14.97 |
| 7 May ‘10 |
13,030 |
17.25 |
24,471 |
14.72 |
| 21 May ‘10 |
2,406 |
18.04 |
-4,997 |
14.16 |
| 4 June ‘10 |
57,895 |
19.12 |
-9,024 |
14.33 |
| 18 June ‘10 |
22,343 |
19.59 |
-23,761 |
13.92 |
| 2 July ‘10 |
91,972.53 |
21.70 |
1,15,162 |
14.92 |
| 17 July ‘10 |
-38,913 |
21.27 |
-40,867 |
14.55 |
Figures in Rs crore; y-o-y growth (%) at the end of fortnight
Source: RBI |
After RBI expressed concerns over low deposit growth, banks today started raising deposit rates in short to medium term. Yesterday in a meeting with bankers RBI has asked them to beef up deposit mobilisation to avoid any asset-liability mismatch.
Deposit growth has been slack on account of unattractive rates, except for the last fortnight when it grew by over Rs 1,15,162 crore. It has been in the negative territory since the beginning of the year as inflation started rising.
With tepid deposit growth, incremental non-food credit deposit ratio of scheduled commercial banks has moved up to 100 per cent at the end of July 2, 2010. While on the outstanding basis, credit deposit ratio was 72.3 per cent at the end of last fortnight.
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