While it seemed that the onset of the busy season would result in corporate India borrowing more from banks, latest data shows that credit growth isn?t all that strong. The growth in non-food credit or the money that banks lend to companies and individuals, for the fortnight ended December 17, 2010, has been just 22.7% year-on-year to Rs 35,77, 345 crore. This is a tad lower than the growth of 22.76% y-o-y in the fortnight ended December 3, 2010, to Rs 35,33,071 crore.

A glance at the lending trends between April 9, 2010 and December 17, 2010, as seen from the data released by RBI, shows that credit growth has been unimpressive at 12%.

RBI has projected a 20% loan growth for the banking industry in 2010-11. While credit offtake has been somewhat disappointing, it?s possible that demand for loans will pick up soon, say bankers. Banks lent an incremental Rs 44,274 crore during the fortnight ended December 17, 2010. Analysts point out that companies have been accessing the short-term markets and borrowing through Commercial Paper. Moreover, top-grade companies have tapped the markets overseas since they are able to access money at finer rates given the interest rate differential. There has been an increase in borrowings through external commercial borrowings (ECB) route.That apart, analysts also say that several companies have cash surpluses which they are putting to use. The base rate regime, too has increased market borrowing, said a recent report by JP Morgan, which observed that base rates are in the region of 8-8.5%. The report noted that till early November, loan growth for the banking industry had been an anemic 7%.

Meanwhile, despite almost every bank having upped deposit rates over the past month, the growth in deposits remained surprisingly sluggish at 14.7% y-o-y to Rs 47,99,789 crore during the fortnight ended December 17. This is lower than the growth of 15.78% y-o-y growth recorded during fortnight ended November 19.