BANK loans have fallen by Rs 1,428 in the two weeks ended April 10, taking outstanding advances to Rs 27,71,440 crore, according to the data released by the Reserve Bank of India (RBI) on Thursday.
Credit rose 18.8%, or by Rs 4,38,632 crore in the 12 months through April 10, while total bank deposits have risen by 22.13%, or Rs 7,06,989 crore, in the same period to Rs 39,01,048 crore.
Last forthnight, bank loans were up by Rs 79,499 crore in the two weeks ended March 27, taking outstanding advances to Rs 27,70,012 crore.
At the same time, credit stood at 17.28%, or by Rs 4, 08, 099 crore, in the 12 months through March 27, while total bank deposits rose by 19.81%, or Rs 6,33,382 crore, in the same period to Rs 38,30,321 crore.
In a teleconference held on Thursday, Crisil said they believe that the slowdown in economic activity, alongside a tightening in banks? underwriting standards, will cause credit growth to moderate over the medium term.
Average credit growth is estimated at 15 to 18% between 2008-09 and 2010-11, as against a figure of more than 25% between 2003-04 and 2007-08.
The lower credit growth will be driven by a sharp slowdown in retail lending, and lower off-take of corporate loans.
Banks have curbed their incremental exposure to retail loans on account of the increase in delinquencies, especially in unsecured loans, and lower demand in the housing and automobile segments.
In case of corporate loans, working capital funds are in demand because of longer working capital cycles, but the decline in demand for term finance (as corporates shelve capital investment plans), and tightening in underwriting standards and exposure limits, will combine to result in lower overall credit off-take, noted Crisil.
During the monetary policy on 21 April, 2009, the Reserve Bank of India said that they are projecting a credit growth and deposit growth of 20% and 18%, respectively, for financial year 2010.