With around three weeks left for the closure of 2010-11, bankers see credit offtake, which has started moderating, to be around 20% during the financial year.
With banks raising their lending rates, non-food credit growth for the fortnight ended February 25, grew 23% year-on-year to R37,45154 crore as against arise of 23.6% y-o-y in the fortnight ended February 11. However, between April and now, credit has grown over 17% year-on year or just over R5.52 lakh crore.
Credit growth could taper off with leading banks having upped their base and benchmark prime lending rates, said bankers. Most banks including Bank of Baroda, Union Bank of India, Bank of India and Punjab National Bank, ICICI Bank , HDFC Bank hiked their base rates and BPLR by up to 50 basis points since the RBI hiked key policy artes by 25 basis points each on January 25.
MD Mallya, CMD of BoB, said, ?I believe the current financial year will end with credit growth at 20-21% and deposit growth at 17-18%, which was well within the projection of RBI.?
The last quarter of the last fiscal witnessed high credit growth. More credit growth was happening in sectors like housing, infrastructure and auto financing, he said. ?However, we are expecting to close this fiscal with a credit growth at 24% and deposit growth at 22%,? he said.
DL Rawal, CMD of Dena Bank, said, ?In the current fiscal will see the credit growth at 22% and deposit growth at 20%.?
Certificate of deposits (CDs) have also gone up due to liquidity crunch. Still, as the government spending has started happening now, liquidity would start easing now. ?Again, the liquidity to a certain extent is likely to go out of the system once advance tax payment begins,? Rawal said.
Bhaskar Sen, CMD of UBI, said, ?We are selective towards long-term loans like infrastructure sector and commercial real estate. We have improved our CD ratio to 68%. So, we are able to go for redeployment of funds for credit growth.?
M Narendra, CMD of IOB, explained the gap between growth of credit and deposit had come down which was a good thing. Also, credit growth has slightly moderated, whereas the deposit growth was picking up. ?Liquidity shortfall is also under control. Government expenditure has also started happening. We can?t stop credit supply to any of the productive sector of the economy. Still, we are partly cautious towards sectors like infrastructure and commercial real estate.?
Mohan Tanksale, executive director Punjab National Bank observed that credit growth was still happening at 23-24%, whereas the deposit growth was also happening at 15-16% in the industry. ?There is no issue of liquidity now. So, if we can take a call on curbing the credit growth to any sector, then it was the commercial real estate where our bank?s exposure was at 3% of the entire loanbook as of now. But, we can?t stop credit supply to any other sectors like agriculture, MSME, retail, home loan and car loan and even personal loans,? he added.