Banks SLR investments top 35 per cent of NDTL

Our Banking Bureau

Mumbai, Aug 28: COMMERCIAL banks, as of end-March 2001, held statutory liquidity ratio (SLR) investments to the extent of 35.1 per cent of their net demand and time liabilities (NDTL), higher than the mandatory requirement of 25 per cent.

Banks’ holding of SLR paper amounted to around Rs 1,60,000 crore over and above the SLR requirement, and this was much higher than the net annual borrowings of the Central government.

Domestic credit — adjusted for scheduled commercial banks’ investments in non-SLR securities — decelerated to 15.8 per cent during 2000-01 from 17 per cent during 1999-2000.

The share of the government in adjusted domestic credit declined to 40.6 per cent at end-March 2001 but continues to remain substantial. The ratio of incremental non-food credit (adjusted) in incremental domestic credit (adjusted), at 43.8 per cent during 2000-01, was comparable with 45 per cent during 1999-2000.

Domestic credit — adjusted for scheduled commercial banks’ investments in non-SLR securities — increased by 3.6 per cent during the first quarter of 2001-02 as against five per cent during the corresponding quarter of the previous year.

Net-bank credit to the government rose to 7.8 per cent during 2001-02 (up to June 29) from 6.6 per cent during the corresponding quarter of 2000-01, partly reflecting a sharp increase in the Centre’s fiscal deficit. Scheduled commercial banks incremental investments in government securities worked out to Rs 23,426 crore.

Bank credit to the commercial sector dropped to 0.6 per cent from 3.7 per cent during the corresponding period in the previous year, mainly on account of a decline in commercial bank non-food credit by Rs 3,126 crore in sharp contrast to the increase of Rs 16,485 crore in the previous year.

The usual quarter-end bulge in non-food credit was reflected in an increase of Rs 3,952 crore during the fortnight ended July 13, 2001. On a year-on-year (YoY) basis, adjusted domestic credit worked out to 15.1 per cent as on July 27, 2001, as compared with 18.2 per cent as on July 28, 2000, as non-food credit dropped to 11.4 per cent as on July 27, 2001 from 21.5 per cent as on July 28, 2000, reflecting the lower off-take since January 2001.