Non-food credit growth at sub-10% level for 2nd week

With companies moving towards cheaper funds, banks plan to focus on retail lending

Non-food credit growth at sub-10% level for 2nd week

Non-food credit growth has remained below 10% for the second consecutive week, showed latest data released by the Reserve Bank of India (RBI) on Wednesday.

Non-food credit growth for the 14-day period ended September 19 came in at 9.78% year-on-year (y-o-y) to R60,41,455 crore.

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Credit growth, which fell to a decade low in the fortnight ended September 5, was one of the major points bankers discussed in the post-policy meet with the press on Tuesday.

Bankers are now trying to grow their books by

focussing on retail loans as there are no new projects for their capex cycle to begin. ?Retail credit has been growing and (is) stable. Sentiments such as the festival season will add to

demand. As far as working capital is concerned, it all

depends on the momentum coming back into the economy,? said Chanda Kochhar, the managing director and chief executive officer (CEO) of ICICI Bank.

Corporates have been tapping other means of cheaper funding such as the bond and the commercial paper (CP) market. Companies have sourced around R3 lakh crore by privately placing bonds and another R21,000 crore through public issuances in 2014 so far. Base rates of most public sector banks are in the 10%-10.25% band, while an AAA-rated firm can raise 10-year bonds at a cost of 9.4%-9.6%. In FY14, credit growth had hit a high of 18.2% y-o-y in the fortnight ended September 18, 2013.

Credit demand in 2013 had increased in August and September, as the central bank had taken extraordinary liquidity-tightening measures in July that year to stem the slide of the value of the rupee, which had hit a lifetime low of 68.825/$ in August 2013.

Meanwhile, deposits recorded a growth of 13.37% y-o-y to R81,06,633 crore. Time deposits grew at 13.47% y-o-y to R73,69,898 crore and demand deposits grew at 12.4% y-o-y to R7,36,751 crore y-o-y.

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First published on: 02-10-2014 at 02:23 IST