Bank credit growth eases to five-year low of 10.9%

Deposits growth sharply outpaces credit growth in August 2014

Scheduled commercial banks' (SCBs) credit growth has moderated to nearly five-year low of 10.9% at Rs 61175.06 billion on 22 August 2014 compared to the 16.3% growth in August 2013 and 13.3% increase end June 2014. The credit growth has moderated from 15.7% in January 2014, declining to 57-months low of 10.9% in August 2014. Non-food credit, accounting for 98.2% of the share of the total credit, grew 11% to Rs 60097.2 billion on 22 August 2014 as against a rise of 16.5% a year ago. The overall credit-deposit ratio declined from 77.5% in August 2013 to 76% on 22 August 2014, while also eased from 77% at end June 2014.

Aggregate deposits growth of the scheduled banks increased 13.6% to Rs 80488.26 billion on 22 August 2014 over a year ago, compared with 12.4% growth at end June 2014 and 12.6% increase in August 2013. The deposit growth was driven by improved growth for demand as well as time deposits. The time deposits moved up 13.7% at Rs 73202.51 billion, while demand deposits increased 12.1% to Rs 7285.7 billion on 22 August 2014. The deposit growth has sharply outpaced the credit growth in August 2014.

Banks investment in government and other approved securities that qualify for treatment of statutory liquidity ratio increased 10.1% to Rs 23644.21 billion on 22 August 2014 over a year ago, showing acceleration in the pace of growth from 7.5% in June 2014. The investment-deposit ratio stood at 29.4% as on 22 August 2014, down from 30% end August 2013, while it has increased from 28.8% end June 2014 and remains much higher above the statutory liquidity ratio of 22%.

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