The pace of growth in bank credit, as well as deposits, has moderated on a fortnightly basis. While credit grew 14.5 per cent to Rs 94.29 trillion, deposits rose a tepid 9.63 per cent to Rs 121.22 trillion for the fortnight ending February 1, according to the latest Reserve Bank of India (RBI) data. In the fortnight ended January 18, deposits had increased by 9.69 per cent to Rs 119.86 trillion and credit grew 14.61 per cent to Rs 93.32 trillion, the RBI data showed.
The gap between pace of credit disbursal and deposits mobilisation is widening. This would maintain the pressure on deposits rates. According to bankers, these may not soften, even though the RBI reduced policy repo rate by 25 basis points, bankers said.
According to the RBI’s monthly bulletin released in February, the sectoral deployment of bank credit saw a qualitative shift with aggressive lending to the retail segment and in the form of personal loans. Credit to industry has gradually gained momentum in 2018-19 so far after a prolonged contraction.
The pick-up in economic activity has boosted credit demand. However, their lending rates have remained in the shadow of the large pool of bad loans, the bulletin added.