Meanwhile, deposits grew at a modest 13.58% y-o-y to R80,48,826 crore in the fortnight to August 22. Time deposits grew 13.73% y-o-y to R73,20,251 crore, while demand deposits rose 12.09% y-o-y to R7,28,571 crore.
Bankers hope demand for funds will pick up in the busy season. S L Bansal, chairman and managing director, Oriental Bank of Commerce, agreed it had been a flat season so far. We expect to see a pick-up in credit after October, he told FE.
In FY14, credit growth had hit a high of 18.20% y-o-y in the fortnight ended September 18. Credit demand in 2013 had increased in the months of August and September as the RBI had taken extraordinary liquidity tightening measures in July to stem the slide of the value of the rupee, which had hit a lifetime low of R68.825 in August to the dollar.
The tightening measures had pushed up interest rates on commercial papers (CP), making them costlier and, hence, companies looked at banks for their funding requirements. Bankers expect credit demand to pick up in the third quarter of FY15 following a number of project clearances by the Narendra Modi-led NDA government.
Data released by RBI recently showed that growth in loans to industries continued to be anaemic in the month of July and rose at just 10.1% y-o-y to R25,07,900 crore compared to 15.9 % in the same period last year.
Credit to large industries grew only 1.8% y-o-y to R20,25,700 crore compared to a growth of 16.7% in the corresponding period last year. Credit to micro and small industries too grew at a mere 2.3% to R3,543 crore compared to 20.3 % last year.