Bank credit up 22.6%, deposits rise 16.6% in 12 months to May

Credit offtake from banks grew 22.6% for the one year period ended May 6, 2011, to over Rs 40 lakh crore, indicating an upswing in industrial activity.

According to the latest RBI data, credit offtake during the period stood at Rs 40.78 lakh crore against Rs 33.25 lakh crore in the same period of the previous year.

Meanwhile, deposits went up to about Rs 54.66 lakh crore, from Rs 46.87 lakh crore as on May 7, 2010. This is a rise of about 16.6% on annual basis.

In annual monetary policy 2011-12, announced earlier this month, the RBI had said that credit is likely to rise at a faster pace because of the economy's growth momentum.

"Sustained growth momentum could continue to exert pressure on interest rates through high demand for credit," it had said.

During 2010-11, bank credit increased by 21.5%, while deposits grew by only 15.5%. In monetary policy for 2010-11, RBI had estimated credit growth of 20%, while deposit growth was pegged at 17%.

However, in December 2010 the apex bank expressed concern over the widening ratio between credit and deposit rates of banks. Towards the end of last fiscal, however, the gap in the credit:deposit ratio stood reduced.

This time the central bank has not made any projections for growth in credit or deposits for 2011-12.