One-fourth of bank loans in FY21 given in last fortnight of year: RBI data

Bank credit up 5.6% in FY21; Deposits surge 11.4%

Commercial banks in India gave almost one fourth of loans (about Rs 1.55 trillion) in the last fortnight of the financial year, reflecting a surge in year-end activity.

The total lending was Rs 5.80 trillion in Fy21 lower than about Rs six trillion in Fy20. The outstanding credit stood at Rs 109.51 trillion as of March 26, 2021, according to Reserve Bank of India data.

On a year-on-year basis, the lending by commercial banks rose by 5.6 per cent in the financial year (Fy21), a period marked by economic contraction due to COVID-19 pandemic as against 6.1 per cent in Fy20.

As a for deposits, it was a year of bounty for banks. The deposits rose by 11.4 per cent (Rs 15.45 trillion) in Fy21, higher than 7.9 per cent (Rs 9.93 trillion) in Fy20.  The outstanding deposits stood at Rs 151.13 trillion as on March 26, 2021.

Rating agency CARE Ratings said the wide difference between deposits and credit growth led to persistent excess liquidity in the system which was supported further by RBI’s OMOs and Targeted Long-Term Repo Operations (TLTROs).

As for bank credit growth in Fy22, CARE said it will increase for sure and go up to 10 per cent provided these localized lockdowns don’t come in the way. It can get moderated by 2% i.e. 8% as services, which have a fair share in total credit at 27 per cent has been buffeted with the lockdowns in several states.

Similarly, MSMEs have done well under the emergency credit line but have not gone beyond. The present situation can affect their appetite for funds. Therefore, there is a downside risk, it added.