You are here: Home » Finance » News » Banks
Business Standard

Covid-19 crisis: Bank credit shrinks by over Rs 54,000 cr in August

According to Reserve Bank of India data, the year-on-year growth in credit was 5.5% for the fortnight ended August 28, 2020

Topics
Coronavirus | Bank credit | Lockdown

Abhijit Lele  |  Mumbai 

bank, credit, growth, loans, funding, capital, cash, m&a, payment
CARE Rating, in a statement said the slowdown reflect weak demand and risk aversion in the banking system

in India shrunk 0.5 per cent, or Rs 54,000 crore, in August to Rs 102.11 trillion (as of August 28, 2020), as the Covid-19 pandemic continues to hit demand for loans. The outstanding credit in the banking system was Rs 102.65 trillion as of July 31, 2020.

According to the (RBI) data, the year-on-year (YoY) growth in credit was 5.5 per cent for the fortnight ended August 28, 2020, maintaining the pace seen in the previous fortnight. Credit growth was in double digits (10.2 per cent) in the corresponding period last year.

CARE Rating said this reflects weak demand and risk aversion in the banking system. August saw further easing of restrictions imposed to contain the Covid-19 pandemic and stepped up credit disbursements to micro, small and medium enterprises under the government-guaranteed credit scheme. Yet, the incremental credit growth is weak, bankers said.


Chart

CARE said scheduled commercial are also cherry-picking their credit portfolios with caution due to asset quality concerns. With economic activities remaining subdued, the overall is expected to remain slower in the near term, it said. India’s economic growth took a severe knock in the first quarter of the current financial year (Q1FY21) with gross domestic product shrinking 23.9 per cent.

garnered a little over Rs 15,000 crore in deposits in August. The banking system had outstanding deposits of Rs 141.76 trillion (August 28), against Rs 141.61 trillion (July 31).

The YoY growth in deposits was 10.9 per cent, against 11 per cent in the previous fortnight. The pace of growth in deposits is on a par with the trend seen in the corresponding period last year.

The credit to deposit ratio of banks has been falling every fortnight, with the ratio at 72.03 per cent on August 28, down from 73.48 per cent in early June, the RBI data showed.

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: Sat, September 12 2020. 21:38 IST
RECOMMENDED FOR YOU
.