Credit growth slips below RBI projection

Annual growth in bank advances fell moderately below the projection of 17 per cent set by the Reserve Bank of India in the monetary and credit policy for the current financial year.

As on August 10, bank advances grew 16.6 per cent over the corresponding period last year. Deposit growth, though slower, showed an uptick of 14.63 per cent in the same period. Over the fortnight ended August 10, bank advances grew Rs 20,489 crore and deposits grew Rs 38,393 crore. Bank credit also improved on the year-to-date basis with 0.4 per cent growth.

Bankers were of the view credit growth will pick up as most of them have cut lending rates on retail loans. “Since loan demand from corporate sector is somewhat muted, we are expecting retail sector to drive credit growth for the rest of the year,” said executive director of a public sector bank.

Growth in bank deposits has been a cause of concern. RBI had projected growth of 16 per cent for the current financial year. However, the annual growth has been 13-14 per cent in the current financial year.