Bank deposits, advances fall through April

Bank deposits and advances fell through April, after rising sharply towards the end of the previous financial year. The growth in deposits over the year was 13.3 per cent while loans grew 17.6 per cent, as on April 20, showed data released by the Reserve Bank of India (RBI) on Wednesday.

Banks had clocked deposit growth of 17.4 per cent and credit growth of 19.4 per cent at the end of March. Deposits have since shrunk by Rs 80,000 crore and advances by Rs 87,000 crore.

“The demand for bulk deposits has reduced and, hence, there are no rollovers now,” said a treasury official of a large public sector bank.

As a result, the rates on short-term bulk deposits have reduced by a little over 100 basis points.

Data shows demand deposits of banks have fallen by Rs 1.4 lakh crore since the start of the current financial year (April 1). Bank investments in government securities has increased by Rs 72,500 crore in the same period.

RBI, in its Annual Monetary and Credit Policy, has projected growth of 17 per cent in bank advances and 16 per cent in deposits for the current financial year. Bankers said deposit growth was a cause of concern, as liquidity remains tight. Also, banks have lowered deposit rates following a 50 bps reduction in the policy rate by RBI on April 17.