Growth in non-food credit rose to a three-month-high of 6.63% year-on-year during the fortnight ended June 9 from 5.86% in the previous fortnight, according to provisional data released by the Reserve Bank of India (RBI). The corresponding figure in the year-ago period was 9.33%. Outstanding loans to companies and individuals rose to Rs76 lakh crore from Rs75.33 lakh crore a fortnight ago. Total bank credit rose 5.95% y-o-y to Rs76.58 lakh crore, as against a 5.08% growth in the previous fortnight and 9.01% in the year-ago period. Aggregate deposits with the banking system grew 10.84% y-o-y to Rs105.78 lakh crore. This was higher than the May 26 figure of Rs105.51 lakh crore. The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, rose 43 basis points (bps) from the fortnight ended May 26 to 72.4% . The credit growth was subdued in recent quarters in an environment of muted private-sector investment. In addition, increased levels of disintermediation have also hurt demand for bank credit.
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Money raised by corporates through bonds and commercial paper (CP) so far in 2017 added up to at least Rs1.55 lakh crore, as against a net Rs3.57 lakh crore disbursed by banks in non-food credit, as of May 26. According to RBI data, the net issuance of CPs, as of June 15, stood at Rs26,720 crore, while data from the Securities and Exchange Board of India (Sebi) showed net corporate bond issuance during the quarter ended March stood at Rs1.28 lakh crore. Analysts note that banks saw an improvement in credit offtake in the quarter ended March. In a note dated June 5, Kotak Institutional Equities wrote, “Growth across segments except large corporate appeared to be better sequentially as 3QFY17 was impacted by demonetisation.” Banks expect incremental growth to be driven by retail. ICICI Bank chief executive Chanda Kochhar told reporters after the bank’s Q4 results, “Looking ahead for FY18, we expect domestic loan growth to be around 15-16%, driven by 18-20% growth in the retail segment and about 15-20% growth in the SME segment.” She gave no outlook for growth in corporate credit.