Non-food credit grows 15.07%
Non-food credit growth continued to be modest despite it being busy season, data from Reserve Bank of India show. Non-food credit — loans to companies and individuals — grew at a somewhat subdued 15.07% y-o-y in the fortnight to December 14, taking the outstanding loans in the system to R48,53,965 crore. As credit growth slowed this year, in the second quarter review of the monetary policy, RBI had cut credit growth projection by 1 percentage point to 16%. “Credit will grow up to RBI’s projection as retail credit and working capital demand is healthy, but credit demand for new projects may not come this financial year,” said M Narendra, CMD, Indian Overseas Bank. Since April this year credit growth has been 4.95%, according to the latest data.
Meanwhile, as on December 14, banks' deposits grew by a sluggish 13.35% y-o-y to R64,33,934 crore. In the second quarter review, RBI had projected deposit growth of 15%.
Deposit growth has weakened over last two years for banks as rising inflation lured investors to other products, primarily gold and real estate. With returns from deposits dipping after many banks lowered their interest rates on deposit earlier this year, most customers switched to other financial products as well.
The credit-deposit gap has widened this year due to which the banks are borrowing more than R1 lakh crore from RBI’s liquidity adjustment facility (LAF).
Baring the country’s largest lender State bank of India, which has excess deposits,
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