Bank credit up 18%; infra sector gets lion's share

After heavy disbursals in the previous fortnight, incremental lending by banks dropped to Rs 2,406 crore in the fortnight up to May 21, 2010.

According to data released by the Reserve Bank of India (RBI), bank credit went up by Rs 2,406 crore to Rs 32,30,178 crore at the end of May 14. On a year-on-year basis, credit has grown by 18.04 per cent. During the fortnight ended May 7, banks lent an additional Rs 13,030 crore.

During the fortnight, deposits mobilised fell by Rs 4,997.1 crore. This was mainly due to time deposits, which fell Rs 28,871 crore, while demand deposits fell Rs 4,084.7. On a year-on-year basis, deposits rose 14.16 per cent.

The central bank has projected that credit will grow 20 per cent and deposits 18 per cent this financial year.

“The bulk of demand is coming from the infrastructure sector. All other sectors are showing normal growth. Demand from the retail side is steady but growth in home loans has been modest,” said a senior executive of Axis Bank.

Despite the fall in deposit mobilisation, banks’ investment in government securities, or instruments that can be accounted for while calculating the statutory liquidity ratio, increased by Rs 16,585.1 crore. Banks generally park surplus funds after meeting the demand for credit.

Record credit growth in the last fortnight of the previous financial year helped banks sail past RBI’s estimate of 16 per cent growth for the year.

Banks disbursed an additional Rs 1,15,548 crore in 15 days up to March 26, almost 25 per cent of the Rs 4,64,849 crore disbursed in the entire financial year.