Growth in non-food bank credit recovered to 7.46% year-on-year (y-o-y) during the fortnight ended September 29 from a six-month low of 4.3% in the previous fortnight. The corresponding figure in the year-ago period was 12.55%.
According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals rose to Rs 79.62 lakh crore from Rs 77.28 lakh crore a fortnight ago.
The net corporate bonds outstanding, at the end of June, was Rs 24.81 lakh crore, up 20% from Rs 20.63 lakh crore in June 2016, as per data released by Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers (CPs) stood at `3.93 lakh crore as of September 30, up from Rs 3.49 lakh crore in the previous year.
Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to at least Rs 108.36 lakh crore, up 10.3% from Rs 98.21 lakh crore in the comparable period last year. Outstandings on corporate bonds as at the end of September are not available yet.
Total bank credit rose 6.9% y-o-y to `80.1 lakh crore, as against a 3.82% growth in the previous fortnight and 12.1% in the year-ago period.
Aggregate deposits with the banking system grew 8.66% y-o-y to Rs 109.68 lakh crore, up from R107.07 lakh crore a fortnight ago.
The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, rose 35 basis points (bps) from the fortnight ended September 15 to 73.02%. This is the highest CD ratio clocked by the banking sector since demonetisation was announced on November 8, 2016. The increase in the ratio has come on the back of gradual improvement in credit deployment and a relatively slow growth in deposits during September. Deposits had been growing at an average of 11% y-o-y for most of FY18.
Much of bank credit growth is being driven by retail loans, with a sharp slowdown in fresh investments having hit corporate borrowing. Analysts say the medium-term growth outlook for corporate loan growth is weak, given ongoing deleveraging by large corporate borrowers, lack of large-ticket capital expenditure and the phenomenon of better-rated borrowers moving from banks to the bond markets. In a recent note, Kotak Institutional Equities wrote that technical factors, such as the approach of moratoria of restructured loans, may contribute to slow growth.
“Many of the restructured loans are now completing their moratorium period, which implies that the pace of repayment of existing loans could have also accelerated or resulted in slippages,” the brokerage said.