Bankers say credit growth is usually slow at the beginning of the year as credit demand is low. In addition, credit demand over most of FY14 was low too. Indian Overseas Banks credit growth for FY14 remained between 11% and 12%, reflecting a slowing economy and tough business environment. Similarly for Dena Bank, the recently concluded financial year showed a 16% growth in credit, chairman & managing director Ashwani Kumar had said.
Lenders hope that FY15 will be a good year in terms of credit growth, thanks to a combination of a lower base and a turnaround in macroeconomic conditions. Bankers expect large players to show a credit growth of at least 18-20% and a 15%-plus growth for smaller ones. Credit growth had hit a high of 18.20% y-o-y in the fortnight ended September 18, 2013. Credit demand had increased in August and September as RBI had taken extraordinary liquidity tightening measures in July to stem the slide in the value of the rupee.
The tightening measures had pushed up interest rates on commercial papers, making them costlier and, hence, companies looked at banks for funding requirements.
Meanwhile, deposits continued to outpace credit marginally and grew at 14.98% y-o-y to R79,31,104 crore. Growth in deposits dropped from the years high of 17% in the fortnight ended December 13, 2013.
Deposit growth saw a spike due to the foreign currency non-resident deposit swap window, which closed on November 30, following which deposit growth has cooled to about 15%.