Non-food credit of banks grew 11.61% year-on-year for the fortnight ended January 22, according to RBI data.
Outstanding non-food credit in the banking system stood at Rs 69.88 lakh crore as on January 22 compared to Rs 69.80 lakh crore in the previous fortnight — a rise of Rs 8,000. The rise in non-food credit growth is in line with bankers’ expectations of a pick up in credit offtake in the second half of FY16.
Growth in deposits was also higher compared to the previous fortnight, at 11.43% y-o-y as against a rise of 10.94% y-o-y in January 8 fortnight.
With project loan sanctions hardly growing and the pipeline dry for many banks, the boost to loan growth is likely to have come from the retail segment. The only solace has been from working capital loan disbursals and these too have picked up only during the last couple of months. Meanwhile, companies have been moving their borrowings to the corporate bond market due to lower interest rates. Between April and December, firms have mopped up close to Rs 3.41 lakh crore through the corporate bond market, indicating a shift from bank borrowing.
Banks have been cutting deposit rates since October 2014 with most lenders paying close to 7.50% for one-year term deposits. This is lower than the yields offered by various schemes for corresponding periods in small savings schemes of the government.