Non-food bank credit grows 15.96% on low base | The Financial Express

Non-food bank credit grows 15.96% on low base

Total deposits grew by 9.5% y-o-y, trailing the rate of loan growth. Banks’ deposits outstanding were at Rs 169.9 trillion as of the fortnight ended August 26.

Non-food bank credit grows 15.96% on low base
Despite the rising lending rates, bank credit growth continues to accelerate due to a revival at a broad-based level across agriculture, industry, services and personal segments, rating agency Crisil said in a report.

Banks’ non-food credit growth continued to be above 15% for three consecutive fortnights, on a lower base. The outstanding non-food credit inched higher by 15.96% year-on-year (y-o-y) during the fortnight ended August 26, data released by the Reserve Bank of India (RBI) showed.

The non-food credit outstanding stood at Rs 124.3 trillion during the fortnight against Rs 107.2 trillion in the same period a year ago. Total deposits grew by 9.5% y-o-y, trailing the rate of loan growth. Banks’ deposits outstanding were at Rs 169.9 trillion as of the fortnight ended August 26.

Despite the rising lending rates, bank credit growth continues to accelerate due to a revival at a broad-based level across agriculture, industry, services and personal segments, rating agency Crisil said in a report.

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Though personal loans remain robust, loans to the industry are also witnessing an improvement. Major infrastructure development plans by the government will have a strong multiplier effect and likely spur demand for infrastructure financing, according to a joint report by the Federation of Indian Chambers of Commerce & Industry (Ficci) and the Indian Banks’ Association (IBA).

In addition to hike in repo rates, RBI has already initiated withdrawal of excess liquidity through bond auctions in open market and variable rate reverse repo operations. This, in additions to higher loan growth compared with deposit growth, has led to further drain of liquidity, the report said.

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