Bank lending grows 9.6 %

Bank lending rose by Rs 23,147 crore during the 14-day period ended November 6, unlike a contraction seen in the previous fortnight.

Bankers said, “Much of the credit offtake is concentrated in retail loans (home, auto) and commercial vehicles. While corporates are taking loans, these are essentially of the short-term variety, taking benefit of cheap funds available due to ample liquidity in the system.”

The outstanding advances at the end of the first week of November stood at Rs 28,91,713 crore. Credit offtake had declined by Rs 21,750 crore in fortnight ended October 23, according to RBI data.

“On a sequential basis, credit growth over the past few quarters has been patchy. The numbers do not square up with the figures for industrial performance. Even if we add non-bank sources of funding such as mutual funds, external commercial borrowing, the figures do not tally,” said Abheek Barua, chief economist, HDFC Bank.

Bank deposits rose by Rs 14,360 crore to Rs 41,67,306 crore during the reporting fortnight. On a year-on-year basis, bank deposits went up by 18.5 per cent against 19 per cent for the fortnight-ended October 23.

The annualised growth in advances remains subdued on the back of weak industrial demand. Credit offtake rose by 9.78 per cent for 12 months ended November 6.

Bankers do not see any significant jump in credit demand and expect it to stay in the 9-11 per cent range over the next few fortnights.

Business growth, especially credit, would see the effect of high base due to unnaturally high credit disbursements by banks last year post-Lehman Brothers debacle. Its effect is expected to continue till December at least. “The high base effect should continue for another 3 months at least. Right now, there is a good demand from infrastructure and we are hopeful about cement and metals,” said Parthasarthi Mukherjee, president (credit), Axis Bank.