Banks' loan book shrinks by Rs 21k cr

Banks’ loan growth fell by Rs 21,468 crore for the fortnight ended July 27 while deposits went up by 22,200 crore, latest data released by the Reserve Bank of India showed.

Since March, bank credit has fallen by Rs 1,800 crore. On year-on-year basis, though, credit growth was 17 per cent – in line with the central bank’s projection for the current financial year. Bankers have attributed the fall in loan disbursement in the current financial year to slowing down of food credit, which had shown a spike in the first three months of the financial year. As on July 27, outstanding loans of banks stood at Rs 47.03 lakh crore.

RBI, in the macroeconomic development report released last month, said loan growth is likely to be sluggish in the current financial as interest rates are still high ,amid economic slowdown.

The gap between credit and deposit growth persisted during the reporting period with deposit growth at 13.8 per cent on year-on-year basis, below the central bank’s indicative trajectory of 16 per cent. Outstanding deposits as on end July was Rs 62.4 lakh crore. The gap between credit and deposit growth, if it persists, can widen the asset liability mismatch of banks.