You are here: Home » Economy & Policy » News
Business Standard

Credit growth up 9.2% in Dec 2021 on strong growth in last fortnight of qtr

Banks lent Rs 3.7 trillion in 15 days to December 31, 2021 and outstanding commercial bank credit stood at Rs 116.83 trillion, RBI data showed

Topics
Banking | credit growth  | loans

Abhijit Lele  |  Mumbai 

Credit offtake outstrips deposit growth

Reflecting the surge in business at the end of the quarter, bank credit rose sharply by 9.2 per cent on Year-on-Year (YoY) basis on December 31, 2021. The YoY growth was 6.6 per cent a year ago, according to Reserve Bank of India data.

The was 7.3 per cent YoY till the previous fortnight ended December 2021.

Banks lent almost Rs 3.7 trillion in the 15-day period ended December 31, 2021 and outstanding commercial bank credit stood at Rs 116.83 trillion, RBI data showed.

Bankers said the upturn in the economy is creating demand in the busy season that began in October 2021. There was also a rise in use of credit limits by corporates and business at the end of Quarter 2021 (Q3Fy22).

However, to see if the rise is sustainable, it will useful to see how credit activity happened in fortnight of ended January 14, 2022 new quarter. Usually, the credit demand slumps in first fortnight of new quarter after surge in last fortnight of previous quarter. Plus, surge is Covid-19 infection including Omicron in third wave may make lender cautious in near term.

The credit-deposit ratio (CD ratio) stood at 71.94 as of December 31, 2021 up from 71.3 per cent at the end of previous fortnight ended December 17, 2021.

CARE Ratings note early this week had said the had been languishing through 2021 due to Covid-19 and also deleveraging of balance sheets by large corporates. However, it has been showing some signs of improvement over the last couple of months on account of growth in retail and agriculture

The bank is expected to be in the range of 8-9 per cent for FY22 with a low base effect, economic expansion. The support is also expected to come from a rise in government and private capital expenditure in road, renewables and production linked incentive (PLI) schemes, extended ECLGS support and retail credit push mortgage finance, it added.

Deposits rose by 10.3 per cent YoY to Rs 162.41 trillion as of end December 2021. The deposit growth was higher at 11.5 per cent a year ago. In the reporting fortnight the banks raised Rs 3.73 trillion via deposits.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, January 14 2022. 21:08 IST
RECOMMENDED FOR YOU
.