Credit growth slows down to 5.14%, shows signs of pickup sequentially

The bank credit growth (year-on-year basis) slowed further to 5.14 per cent in the fortnight ended September 25, from 5.3 per cent in previous fortnight ended September 11. 

However, sequentially the credit showed signs of pick up. According to Reserve Bank of India data, bank credit rose by Rs 44, 210 crore to Rs 102.71 trillion during reporting fortnight (September 25). 

The credit had expanded by Rs 13,198 crore in the previous fortnight (September 11, 2020). The credit of commercial banks stood at Rs 97.68 trillion as on September 27, 2019.

Bank executives said the increase in activity in last fortnight of second quarter is due to rise in retail credit, some of which is pent-up demand. Also corporates have drawn limits before closing books for quarter ended September.   

While gradual unlocking process in the economy is underway, the demand for credit remains muted and people and firms are holding money in accounts. 

The severe disruption in the economic activity due to the stringent lockdown imposed to contain spread of Covid-19 pandemic, impacting credit demand. 

The deposit of commercial banks in India rose by 10.51 per cent in the reporting fortnight (September 25), slower pace than 12 per cent reported for previous fortnight.  The deposits pool rose by Rs 15,632 crore to Rs 142.63 trillion on September 25, from Rs 142.48 trillion at end of previous fortnight.