The pace of non-food credit growth in the banking system has marginally softened after a sustained growth of well over 10% in the current financial year. The non-food credit grew by 17.57% in the fortnight ended November 18, as per the data released by the Reserve Bank of India (RBI). The non-food bank credit during the fortnight stood at Rs 119.5 trillion, as against Rs 110.5 trillion a year ago.
While personal growth continues to lead the credit growth, loans to NBFCs and industry is also on the rise. The sectoral data released by the RBI earlier this week shows that the bank credit to industry has increased by 13.6% in October. So far, the higher interest rate regime has so far not come in the way of growth in credit; however, it needs to be seen if this trend continues for the remaining part of the year, according to a Bank of Baroda report.
The banking sector will not find it challenging to continue growing the credit book at the current pace as long as the risk is understood and well-priced, Dinesh Khara, chairman, State Bank of India (SBI), said. The growth is coming at a time when corporates have already deleveraged, which gives banks confidence that the path which they are treading is sustainable.
The deposit growth came at 9.6%, with the overall base Rs 173 trillion as on November 18, as against Rs 156 trillion a year ago. The banks are looking to raise more deposits to support the credit growth. The increase in repo rates by the RBI has also transmitted to the deposits, leading to higher interest rates on deposits.