Bank credit shrinks in fortnight but grows 17.7% annually

Bank credit shrank by Rs 36,400 crore in the fortnight ended July 13, the first fortnight after the quarter ended June.

However, credit expanded by 17.7 per cent (year-on-year), in line with Reserve Bank of India’s (RBI) estimate for the current financial year (2012-13). Total credit was Rs 47,24,437 crore.

Deposits, too, declined in the reporting fortnight. But, extent of contraction was lower than that of credit. They declined by Rs 7,420 crore, according to RBI data.

Deposits grew 14.7 per cent in the 12 months ended July 13. Total deposits stood at Rs 62,21,750 crore. A senior public sector bank executive said generally deposits and advances tend to shrink in the first fortnight of every quarter.

Credit and deposit show a sharp jump in a few weeks before the end of the quarter, he added.

RBI in its monetary and credit policy for the current financial year had estimated a 17 per cent growth in advances and 16 per cent for deposits.

“Growth in advances is on predicted lines” said S S Mundra, executive director, Union Bank of India. “However, deposit growth is still slightly below the RBI’s prediction” he added.

The deficient monsoon and economic slowdown may moderate the demand for credit in coming quarters and RBI’s in its first quarter review, slated for July 31, might give an assessment of the growth scenario, analysts said.