During the fortnight, bank loans have risen Rs 13,005 crore for the two weeks ended 19 June, 2009, thereby taking outstanding advances to Rs 27,70,215 crore, said the data released by RBI on Wednesday.
Credit growth has remained more or less the same, as against the previous fortnight ended 5 June, at 15.75% or Rs 3,76,977 crore.
As on June 5, credit growth stood at 15.68% or Rs 3,73,867 crore. At the same time, deposit growth is down to 21.95% or Rs 7,14,006 crore, for the two weeks ending 19 June, as against 22.01% or Rs 7,16,694 crore, the previous fortnight.
While there has been a rapid slide in the credit growth in comparison to the deposit growth, yet the fact remains that the banking system is flushed with ample liquidity. On an average, banks are seen parking an average of Rs 1, 00,000 on a daily basis, with the RBI reverse repo window, nearly for the past two months.
This is evident with the call rates staying low, owing to surplus liquidity in the system, at a range of 3.10%-3.35%. However, credit growth is seen on a slower pace as banks are reluctant to extend financial support to those industries who have witnessed a poor credibility due to the slowdown.
?Our econometric model results suggest that the key drivers of credit growth are industrial production, stock market performance, time deposits, and lagged credit growth,? said Sailesh Jha and Rahul Bajoria, economists from Barclays Capital Research.