Banks’ deposit growth steady

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Mumbai | Updated: September 30, 2016 7:09:39 AM

The growth in deposits with banks remained steady at 9.9% year-on-year (y-o-y) during the fortnight ended September 16, against 9.8% in the previous fortnight.

However, banks recorded Rs 65,000-crore decline in absolute terms to Rs 97.9 lakh crore, according to data released by the Reserve Bank of India.However, banks recorded Rs 65,000-crore decline in absolute terms to Rs 97.9 lakh crore, according to data released by the Reserve Bank of India.

The growth in deposits with banks remained steady at 9.9% year-on-year (y-o-y) during the fortnight ended September 16, against 9.8% in the previous fortnight.

However, banks recorded Rs 65,000-crore decline in absolute terms to Rs 97.9 lakh crore, according to data released by the Reserve Bank of India.

Non-food credit offtake in the banking system grew 9.3% y-o-y, a shade lower than 9.8% in the previous fortnight, as low corporate demand and absence of fresh investments by companies weighed on banks’ loan books.

SLR reserves maintained by banks at 26.8% , while showing a marginal drop to Rs 28.39 lakh crore from Rs 28.78 lakh crore, remained well above the regulatory requirement of 21%.

If loan growth continues its weak trajectory in coming days, SLR is likely to remain high as lenders deploy excess cash to cover LCR requirements, analysts tracking the banking sector said.

Credit offtake is likely to remain muted in quarters ahead as capacity in the private sector continues to suffer under-utilisation, and fresh investments are unlikely to come from the private sector.

In the absence of a pick-up in corporate investments, banks with a retail focus are expected to do well in quarters ahead. While project cancellations have been low, this could be a limited positive.

“On the face, this looks promising, but we are not sure if lower cancellations reflect betterment in project conditions or whether this is merely a function of only limited number of projects left in the pipeline post multiple rounds of cancellations in the last five-six years,” investment bank Jefferies wrote in a note dated September 19.

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