Rise 14.78 per cent on a year-on-year basis.

High deposit rates are attracting more customers but deposit mobilisation is still not a strong footing, according to data released by the Reserve Bank of India (RBI). During the fortnight ended September 10, deposits mobilised by banks went up by Rs 20,465 crore, against an increase of around Rs 38,658 crore in the previous fortnight.

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RBI increased the repo rate and reverse repo rate by 25 and 50 basis points to six per cent and five per cent, respectively, in its mid-quarter policy review released last week. However, very few banks have raised deposit rates in response to the latest rise in rates by the central bank.
 

RBI has projected 18 per cent deposit growth for 2010-11. So far, deposit growth has not exceeded 15 per cent in this financial year. Bank credit increased by a larger quantum than deposits, rising by Rs 31,531 crore during the fortnight. It grew by 19.76 per cent on a year-on-year basis at the end of the fortnight. Outstanding bank credit stood at Rs 33,82,927 crore, against Rs 33,51,396 crore at the end of the previous fortnight.

Bankers said they expected modest credit demand in the current quarter. The demand was robust during the first quarter of the financial year, predominantly because of the huge demand from telecom companies for 3G and broadband wireless access.

Last month, yields on CPs had touched a one-year high. This was also because of the banking system shifting to base rates as corporates had no means to raise short-term capital.

The central bank has projected 20 per cent growth in credit for the current financial year.

A number of banks have also increased their benchmark prime lending rates (BPLR) in a bid to coax more customers to move to the base rate system, which came into effect from July 1. So far, base rates have been untouched.

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