SBI deputy managing director and chief financial officer S Govindrajan said that during the quarter advances to the corporate sector had gone up.

"Although over the March 1999 level advances are down by Rs 1,000 crore, this is mainly on account of the fall in advances to the small sector industries (SSI) and small loans," an official said.

Sources said that there were definite signs that an economic recovery is on its way. "The fall in credit is not as alarming as it was in the previous year," an official in the bank said. Credit offtake is traditionally slack in the first half of the fiscal and picks up in the second half after the monsoon comes to an end.

Non-food credit of the entire banking industry as on July 3, 1998, fell by Rs 5,339 crore compared to a fall of Rs 1,807 crore on July 2, 1999.

Analysts say that the lower fall in the non-food credit during the current fiscal is an indication that there could be a higher credit demand during the busy season this year.

SBI's global advances as on March 31, 1999, stood at Rs 90,376 crore while domestic advances were Rs 78,700 crore. "YoY the advances as on July 2 have gone up by Rs 9,000 crore," sources said.

Deposit growth for SBI continued to be healthy in the first quarter. As on July 2, the growth in deposits (excluding the Resurgent India Bonds) was pegged at 14 per cent. Deposits on March 31, 1999, stood at Rs 142,200 crore which moved up to Rs 148,000 crore on July 2. However, for the entire banking sector, deposit accretion of Rs 14,501 crore for the first quarter was slower than the corresponding period last year when accretion was to the tune of Rs 18,959 crore.

The bank's investments were up 23 per cent on YoY basis on July 2. In an indication that the bank has largely supported the government borrowing programme, the bank'sinvestments over March 31 levels were up by Rs 6,000 crore.

Insight

Signs of economic recovery

As per RBI's figures, YoY growth in non-food credit for all scheduled commercial banks is 13.4 per cent as on July 2. But if we include investments in corporate paper, total assistance to the corporate sector is up 16.7 per cent YoY. This fiscal, as on July 2, while non-food credit of all scheduled commercial banks is lower by Rs 1,807 crore compared with the position as at March-end, the deficit has been more than made up by investment in companies' debt instruments. Taking these into account, total exposure of banks to the commercial sector is up by Rs 1,358 crore this fiscal, as against a reduction by Rs 1,249 crore during the same period last year. The figures are clear signs of an economic recovery.

Manas Chakravarty