Non-food credit gets festive boost

Written by fe Bureau | Mumbai | Updated: Oct 15 2014, 06:35am hrs
After hitting near-decade lows, the non-food credit growth recovered to 11.15% y-o-y to Rs 61,70,021 crore in the fortnight ended October 3, latest data from Reserve Bank of India (RBI) showed on Tuesday.

Non-food credit growth has remained at sub-10% levels in the last two reporting fortnights. Bankers say the uptick in the credit could be attributed to the growth in retail loans on account of festive season.

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Indusind Bank managing director and CEO Romesh Sobti said there were signs that credit outlook could improve, however, it would not translate to disbursements on the ground.

I would not say that there is a pick up in the working capital demand but in some of the sectors where we are present, we are seeing a normal demand. We have seen a good increase in our non-vehicle retail book. Our commercial vehicle finance book had been stagnant for about 12 months but saw an increase in September, an upturn fuelled by Siam data, said Sobti.

Corporates have been tapping other means of cheaper funds such as bond and commercial paper (CP) markets. Companies have sourced around Rs 3 lakh crore by privately placing bonds and another Rs 21,000 crore through public issuances in 2014 so far. Base rates of most public sector banks are in the 10.0-10.25% band, while an AAA-rated firm can raise 10-year bonds at a cost of 9.40-9.60%.

Meanwhile, deposits recorded a growth of 13.05% y-o-y to Rs 82,89,310 crore. Time deposits grew 12.77% y-o-y to Rs 75,07,668 crore and demand deposits grew 15.83% y-o-y to Rs 7,81,649 crore.