Composition of disbursements across segments to get a look-in. | |
| The Reserve Bank of India (RBI) has been prompted to consider a detailed study of the composition of credit disbursements by banks in various segments, given the continued high level of growth. |
| |
| "There is continued growth in credit and we are monitoring it closely. The effect of monetary policy actions on credit will come with a lag. We will have to study the composition of credit in various segments," RBI governor, Y V Reddy, today said. |
| |
| Non-food credit grew by almost 32 per cent year-on-year to Rs 15,56,100 crore as on September 1, 2006, against deposit growth of 21.3 per cent to Rs 22,51,701 crore. |
| |
| Banks are required to invest 25 per cent of their deposits in government securities for meeting the statutory liquidity ratio (SLR) norms and deposit another 5 per cent with the RBI as cash reserve ratio (CRR). |
| |
| "The balance between deposit accretion and credit growth also needs to be studied," Reddy said without elaborating on the matter. |
| |
| The credit-deposit ratio as on September 1 was 70.73 per cent, but the incremental credit-deposit ratio is close to 100 per cent. The ratio was over 100 per cent in the whole of last year. |
| |
| There are concerns in the system about the sustainability of current level of credit growth with increase in deposits of the banking system hugely lagging. |
| |
| Banks have been funding the high credit growth over the last few years mostly through liquidation of their excess investments in government securities. |
| |
| The average statutory liquidity ratio (SLR) holdings of the banking system have fallen from a high of over 40 per cent to less than 30 per cent now. The minimum SLR requirement is 25 per cent. Reddy said "all these factors will have to be monitored on a continued basis." |
| |
| Retail credit expanded at rates ranging between 22 and 41 per cent since 2001-02 and accounted for 26.7 per cent of the incremental non-food credit in 2005-06. |
| |
| The share of advances to individuals increased from about 10 per cent of total bank credit in March 2002 to nearly 25 per cent in January 2006. The increase in non-food bank credit was 32.9 per cent (Rs 3,71,993) in 2005-06 on top of an increase of 31 per cent (Rs 2,60,164 crore). |
| |
| The increase in retail credit in the current financial year so far has actually slowed down from very high growth witnessed in April-May 2006. |
| |
| Retail lending by banks had risen by 74 per cent on a year-on-year basis, driven by a 115.5 per cent increase in housing loans in the first two months of the current year. |
| |
|
| |
