In FY14, credit growth had earlier hit a high of 18.20% y-o-y in the fortnight ended September 18. Credit demand had risen in August and September as the RBI took extraordinary liquidity tightening steps in July to stem the slide of the rupee which had hit a lifetime low of R68.825 in August.
RBIs tightening measures had pushed up interest rates on the commercial papers (CPs) making them costlier and made companies turn to banks for their funding needs.
Bankers expect credit demand to pick up in Q3FY15 following a number of clearances of projects by the Cabinet Committee on Investments (CCI) in April.
On capex, while the political and policy environment is conduicive, the financing of capex will still take time. The impact on bank lending is still not in this financial year even for brownfield expansion, said YES Banks CFO Rajat Monga.
Former finance minister P Chidambaram had said that the CCI has cleared 36 projects with an investment of R1.83 lakh crore in a bid to restart the investment cycle.
Meanwhile, credit growth outpaced deposit growth and grew 13.24% y-o-y to R79,96,060 crore. Time deposits grew 13.51% y-o-y to R72,75,600 crore against R64,09,886 crore in the previous year while demand deposits rose 10.71% to R7,20,458 crore from R6,50,751 crore in the year-ago period.