Banks will have to disburse close to Rs 8 lakh crore worth of loans in the next six months to achieve double-digit credit growth as, during April-September, disbursals have remained flat, data from the RBI showed.
Data released on Wednesday showed that outstanding bank credit stood at Rs 68.3 lakh crore as of October 2, a growth of 9.45% year-on-year, but flat since April. Non-food credit has shrunk 0.48% since April, but has grown at 9.79% to an outstanding of Rs 67.42 lakh crore.
Back-of-the-envelope calculations show that disbursals should total close to Rs 8.5 lakh crore to achieve the 12.5% growth that the RBI assumes, out of which banks have disbursed only around Rs 27,000 crore during April-September.
Moreover, non-food credit has infact shrunk 0.48% during April-September, reflecting the tepid demand for credit from corporate owing to a general slowdown in the economy.
The RBI’s baseline forecast for credit growth in 2015-16 is 12.5%, which is also the median of a survey of professional forecasters conducted by the central bank, according to the monetary policy report released last month.
Bank credit has remained flat during April-September with banks having disbursed only around Rs 27,000 crore during this period.
Considering that loan demand from companies remains tepid, banks will face a tough task to meet the credit growth forecast.
Banks are heavily depending on the retail segment, especially during the festival season, for credit growth pick-up. Many banks have already announced special schemes to attract customers besides cutting their base rates after the latest round of policy rate cuts. Base rates have been slashed by 70 basis points so far in 2015.
Meanwhile, deposit growth also remains sluggish at 11.25%, but is faster than credit growth.
Banks have been cutting deposit rates since October last year with most lenders paying close to 7.50% for one-year term deposits. This is lower than the yields offered by various schemes for corresponding periods in small savings schemes of the government.