Growth in non-food bank credit slipped to 7.85% year-on-year (y-o-y) during the fortnight ended October 28, from 8.42% in the previous fortnight. The corresponding figure in the year-ago period was 9.23%. According to provisional data released by the RBI, outstanding loans to companies and individuals fell marginally to Rs 78.54 lakh crore from Rs 78.52 lakh crore a fortnight ago. The net corporate bonds outstanding, as at the end of September, was Rs 25.87 lakh crore, up 18% from Rs 21.95 lakh crore in September 2016, as per data released by the Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers stood at Rs 4.9 lakh crore as on October 31, up 23.5% from Rs 3.96 lakh crore in the previous year.
Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to at least Rs 109.3 lakh crore, up 10.7% from Rs 98.73 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for October is not available yet. Total bank credit rose 7.2% y-o-y to Rs 79.17 lakh crore. Aggregate deposits with the banking system grew 8.67% y-o-y to Rs 108.5 lakh crore, up from Rs 108.8 lakh crore a fortnight ago.
The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, rose 22 basis points (bps) from the fortnight ended October 13 to 72.39%. While much of the bank credit growth is being driven by retail loans and loans for working capital or refinancing, bankers expect a turnaround in the quarters ahead. Speaking after HDFC Bank’s September quarter results, deputy managing director Paresh Sukthankar said there was room for investment-related loan demand to revive. “While currently we are seeing growth on the working-capital side, over the next 12-18 months if capex-related demand picks up, we will participate in that,” he said.