Credit Offtake Growth At 6% In 1996-97
The State Bank of India (SBI) witnessed a sluggish growth in credit offtake at six per cent in fiscal 1996-97 against a 25.7 per cent growth in the previous year. So far, in the current financial year, credit offtake continues to remain poor for SBI.
In the last financial year deposits grew by around 12 per cent over March 1996. In the 1995-96 fiscal, deposits had increased by 12.3 per cent. At the end of 1995-96, total deposits stood at Rs 90,145 crore while outstanding credit was at Rs 51,813 crore.
SBI's performance on the deposit and credit front is in line with the banking sector in general. During 1995-96 corporates were borrowing money irrespective of how high the rates were. The situation has now reversed with funds available but corporates are unwilling to borrow. Consequent to the recent credit policy SBI reduced its prime lending rate to 14 per cent. SBI officials say the interest rates have bottomed out and could be at this level for some time. However, they are unsure about the offtake of credit. "There are hardly any indications that there will be a significant credit offtake. Many of our corporate clients are not drawing even their sanctioned limits," an SBI official said.
On its part the SBI has decided to aggressively target the blue-chip corporates. Of late the bank has set up corporate branches targetted at its high-value clients.
While the lower credit offtake will affect the bottomline of the bank, SBI is expected to post healthy results if the half-yearly figures are any indication.
The half-yearly results were encouraging with SBI posting a net profit of Rs 640.80 crore. In contrast the bank had posted a net profit of Rs 474.1 crore in the first half of the fiscal 1995-96 while the year-end figure was Rs 831.60 crore. Since then the paid-up capital of the bank has also gone up to Rs 526.30 crore on account of the GDR issue for $369.95 million.
The higher net profit in the first half of 1996-97 was principally on account of higher interest income. The second half of 1995-96 was characterised by an improvement in credit offtake. This is expected to have a positive impact on the bottomline of the bank.