After the Reserve Bank of India (RBI) cut its policy repo rate by 75 basis points (bps) on March 27, a number of banks and non-banking finance companies (NBFCs) followed by cutting their lending rates.
Non-food credit growth in the banking system for the fortnight ended April 10 rose to 7.04% y-o-y, while outstanding loans fell marginally compared to the previous fortnight. The figure grew 14.2% during the corresponding period last year.
During the previous fortnight, the non-food credit growth came in at 6.06%. After the Reserve Bank of India (RBI) cut its policy repo rate by 75 basis points (bps) on March 27, a number of banks and non-banking finance companies (NBFCs) followed by cutting their lending rates. The lenders also provided emergency credit lines and other facilities to borrowers to help them tide over the economic impact caused by the Covid-19 lockdown, which started on March 25. Outstanding loans to companies and individuals extended by scheduled commercial banks stood at Rs 102.85 lakh crore as on April 10.
The central bank had also urged lenders to keep credit flowing to various sectors. “Banks and other financial institutions should do all they can to keep credit flowing to economic agents facing financial stress on account of the isolation that the virus has imposed,” the RBI said in the minutes of the latest monetary policy committee meeting.
Meanwhile, deposit growth in the banking system rose to 9.46 %, up 153 bps from 7.93% in the previous fortnight. The rise in deposits comes after a fall in the deposits growth during the fortnight ended March 27 following the Yes Bank crisis, when customers pulled out their deposits from some private lenders. Deposits with scheduled commercial banks during the fortnight ended April 10 stood at Rs 137.15 lakh crore, compared to Rs 135.68 lakh crore during the previous fortnight. The credit-deposit ratio stood at 75.24% during the fortnight.