Deposits grow by 10%, credit by 6% in H1

Credit growth slowed in the first half of current financial year leading to widening of gap between growth in bank deposits and outstanding loans.

As per data released by the Reserve Bank of India (RBI), bank deposits grew by 10% or about Rs 6 lakh crore in the first six months of 2012-13 while bank loans grew by 6% or Rs 2.73 lakh crore in the same period. Deposits had grown by 9.7% and credit by 7% in the corresponding period last financial year.

The RBI had indicated annual growth of 16% in deposits and 17% in credit by the end of current financial year. Bankers are of the view that the central bank may rework the projections in the upcoming monetary and credit policy review.

However, it is expected that loans may pick up in the second half on account of festive demand. In order to take advantage of festive season, most banks including State Bank of India and ICICI Bank have lowered lending rates to attract new customers. 

Krishna Kumar, managing director at SBI recently said that retail segment is expected to grow by 18-20% but may not be able to compensate for slow growth in corporate credit.

"We saw doubling of applicants (per day) for home loans. There is good growth in auto loan segments also," said Kumar adding that SBI was receiving 800-1000 auto loan applications per day.

RBI will announce the second quarter monetary and credit policy review on October 30.