Non-food credit growth slips to 6.06%, deposits growth slows

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Published: April 11, 2020 2:10 AM

Outstanding loans to companies and individuals extended by scheduled commercial banks stood at Rs 103.20 lakh crore as on March 27.

Credit growth, which has been tepid, was further impacted by the outbreak of the Covid-19 pandemic.Credit growth, which has been tepid, was further impacted by the outbreak of the Covid-19 pandemic.

Non-food credit growth in the banking system slipped further to 6.06% year-on-year (y-o-y) for the fortnight ended March 27, 2020, which was the lowest since May 2017. The figure grew 13.3% during the corresponding period last year.

Meanwhile, deposit growth in the banking system slipped to 7.93%, down 116 basis points (bps) from the previous fortnight ended March 13.

Deposits with scheduled commercial banks during the fortnight ended March 27 stood at Rs 135.71 lakh crore, compared with Rs 133.39 lakh crore during the previous fortnight.

Deposits grew at their slowest pace since June 2018. Private lenders have taken a hit on their deposits in the aftermath of the RBI restructuring Yes Bank last month. Lenders, including IndusInd Bank and RBL Bank, have seen their deposits fall considerably in the fourth quarter.

Outstanding loans to companies and individuals extended by scheduled commercial banks stood at Rs 103.20 lakh crore as on March 27.

The non-food credit grew 6.07% y-o-y during the previous fortnight ended March 13. Credit growth, which has been tepid, was further impacted by the outbreak of the Covid-19 pandemic.

In its latest monetary policy report, the RBI said credit growth is likely to remain “modest”, reflecting the weak demand and global risk aversion during the pandemic.

Economic activity in India slowed to a crawl following the massive disruptions caused by the nationwide lockdown to prevent the spread of the highly contagious novel coronavirus.

The central bank’s post-Covid-19 projections show that “the global economy is expected to slump into recession in 2020”. The outbreak has also “drastically altered” India’s growth outlook, the RBI said. The central bank’s monetary policy committee, in an out-of-cycle review, decided to cut the repo rate by 75 bps last month.

Several lenders followed suit by cutting their marginal cost-based lending rates in a bid to push credit offtake.

The RBI said “better transmission of monetary policy impulses to the credit market would remain a priority.”

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