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Bank credit has decreased by Rs 16,620 crore in the fortnight ended July 12. Similarly, banks have lost deposits worth Rs 10, 300 crore, according to RBI data. On the year on year basis, credit and deposit grew by 14.2 per cent and 13.7 per cent, respectively.
RBI’s projection for this year’s credit and deposit growth is 15 and 14 per cent respectively. Total credit stood at Rs 54 lakh crore while total deposits stood at Rs 70.8 lakh crore.
According to bankers, the first half is always slow in terms of credit pick up and disbursement grows only in the second half, after the monsoon.
Deposit growth continues to be sluggish even if banks have largely left interest rates on retail deposits untouched. A few of them, however, have reduced to the rates on bulk deposits.
After being chided by the finance ministry, some public sector banks have reduced their base rates. Others, who were about to follow suit, however had to hold back their decisions on RBI’s liquidity tightening measures.
In the previous month, the State Bank of India had reduced bulk deposit rates by 25 basis points for the selected tenors. Most banks, however, haven’t reduced the retail deposits yet, as they fear depositors might turn to other asset classes which give them better returns than banks’ fixed deposit. In this calendar year, RBI has reduced repo rates by 75 basis points to 7.3 per cent and cash reserve ratio by 25 basis points to four per cent.
