Non-food credit growth crawls

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SummaryAt 15.63% y-o-y growth, non-food credit falls short of Reserve Bank’s projections.

Banks' non-food credit growth continued to crawl at a pace lower than the Reserve Bank of India's projection for 2012-13 with year-on-year growth being 15.63% as of October 19, latest data from the RBI show.

Outstanding credit as on October 19 was R47,20,718 crore, up 15.63% on year. Year-on-year credit offtake has averaged around 16% over the last six months baring occasional spikes to 17%. Despite it being the festival season when companies tend to boost inventories to meet consumers' increased spending, most bankers are skeptical about a pick up in credit growth.

The RBI, which had earlier projected credit growth at 17% for the current year, slashed it to 16% on Tuesday at its monetary policy review. “RBI's lowered credit projection is more realistic,” said SS Mundra, the executive director at Union Bank of India. Growth in corporate loan portfolios of most banks have decelerated sharply and several bankers fear fresh sanctions are unlikely.

“There has been some pick up in corporate loan sanctions after October 15, but it is still not very major,” said an executive director of a large public sector bank.

On other hand, growth in retail loanbook of banks has been mixed with some banks having robust growth while some have not seen enough pick up despite launching festival schemes.

Bank of Baroda's retail loan portfolio grew by 14.6% for July-September quarter as against its corporate loan growth of 17%. Bank of India saw its retail loan book expand by 24%. Private sector banks such as HDFC Bank and ICICI Bank have seen robust retail loan growth at 33% and 14% respectively. The growth of the total loan book was 22% for HDFC Bank and 18% for ICICI Bank.

Pratip Chaudhuri, chairman of State bank of India, has said that retail loan sanctions have tripled ever since festival schemes were launched by SBI. Until September, retail loans have seen a growth of just 12.6%, as per latest RBI's sectoral data on credit.

Meanwhile, deposit growth continued to lag that of credit at 13.61% as on October 19. Outstanding deposits were R63,88,609 crore, a growth of just 4.52% since April. In the fortnight ended October 19 , deposits fell by R 22,427 crore.

The wedge between deposits and credit continues to be wide and a worry for the RBI in the context of liquidity deficit.

On Tuesday, RBI governor D Subbarao said that liquidity deficit could worsen in coming months structural due to the gap

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