Credit, deposits shrink in first fortnight of FY14

Credit grows 14.51%, deposits up 13.27% y-o-y

Continuing with the annual phenomenon, banks lost deposits and shrunk their loanbooks in the first full reporting fortnight of the new financial year.

The banking system lost deposits worth Rs 66,381 crore, while assets came down by Rs 56,459 crore as of April 19.

On a year-on-year (y-o-y) basis, deposits rose 13.27 per cent, while loans grew 14.51 per cent.

Banks generally roll over deposits and loans at the year end to meet their yearly targets, said a banker.

The scramble for deposits and loans was seen at the end of the financial year as deposits spiked by 17.38 per cent and credit by 16.99 per cent, y-o-y, in the week ended March 29.

Although loan growth was within RBI’s projected levels, deposit growth had lagged for last financial year.

Deposits in the full year had never risen 15 per cent, y-o-y, only to rise over 17 per cent in the last week of the financial year.

The central bank is expected to project the credit and deposit growth target for this year in annual policy announcement tomorrow.