The growth in non-food credit, for the fortnight ended February 26, 2010, has crossed the 16% mark. The amount of money that banks lend to companies and individuals, grew at 16.11% year-on-year during the fortnight. That?s nearly 70 basis point higher than the 15.4 %growth seen in the previous fortnight ended February 12, 2010.
However, according to the data released by the Reserve Bank of India (RBI), total credit growth (including food credit) for the fortnight rose 15.79% compared with the growth of 15.07% year-on-year, reported for the previous fortnight. The credit outstanding with borrowers stood at Rs 30,89,323 crore for the fortnight ending February 26, 2010. In its last monetary policy, RBI had lowered its credit growth target for the banking sector for the current fiscal to 16% from the 18% that it had targeted earlier.
Bankers confirm there are more takers for money. Union Bank of India executive director S Raman said,?Yes, we are seeing a pick-up in credit offtake. For instance, in the infrastructure segment, our book should grow by over 20% this year while our SME portfolio should grow by about 25-30%.? Union Bank hopes to end 2009-10 with a credit growth of around 20%.
HSU Kamath, executive director, Canara Bank, confirms that smaller corporates are looking for money. ?We are seeing a smart pick-up in loans to the SME segment and we should lend around 32 % more this year to that space, ? he said. Kamath observes that Canara Bank will also see a sharp rise in lending to the infrastructure space, which could be of the order of 50%. However, he said large corporates don?t appear to be borrowing too much just yet though there are more retail customers now than there were a few months back.
At the Mumbai-headquartered Bank of Baroda, executive director, RK Bakshi believes the bank will be able to grow its loan book by about 18% this year. Bakshi observes that there has been borrowing across segments, including retail and SME spaces. He notes that large companies too have started approaching the bank for working capital.
Since there has been abundant liquidity in the system over the past six to eight months and several companies were also able to tap the equity markets, bankers have been hard pressed to lend. Also, despite interest rates being low, individuals have been reluctant to borrow.
Meanwhile, deposits (both time and demand) have grown by 16.83% year-on-year to Rs 43,63,330 crore for the fortnight ended February 26, 2010. RBI in its January credit policy had reduced its the deposit growth rate target to 17% from 18%.