Meanwhile, deposit growth in the banking system rose to 9.83%, falling marginally compared to the previous fortnight.
Non-food credit growth in the banking system for the fortnight ended April 24 stood at 6.67% year-on-year (y-o-y), lower by 66 basis points compared to the previous fortnight. The figure grew 13.14% during the corresponding period last year.
The year-to-date (YTD) non-food credit fell by 1% between March 27 and April 24. During the previous fortnight, the non-food credit growth stood at 7.04%. Outstanding loans to companies and individuals extended by scheduled commercial banks fell to Rs 102.17 lakh crore as on April 24. The outstanding non-food credit has been falling since the fortnight ended March 27, shortly after the lockdown was announced on March 25.
Meanwhile, deposit growth in the banking system rose to 9.83%, falling marginally compared to the previous fortnight. The growth in deposits comes after a dip in the aftermath of the Yes Bank crisis during the end of March. Deposits with scheduled commercial banks during the fortnight ended April 24 stood at Rs 137.11 lakh crore, compared to Rs 135.15 lakh crore during the previous fortnight. The credit-deposit ratio stood at 74.5% during the fortnight.
Rating agency Icra said that banks are expected to account for Rs 6-7 lakh crore of incremental credit during FY21, while the incremental credit flow from banks, commercial papers and corporate bonds outstanding is expected to rise by Rs 7.3-9.7 lakh crore during FY2021. “The incremental credit growth from banks stood at Rs 5.9 lakh crore and stood weak during FY2020 as compared to Rs 11.9 lakh crore during FY2019 as slowing economic growth curtailed the fresh credit demand apart from increased risk aversion among lenders,” the agency said, adding that the expectations of increase in incremental credit flow during FY2021 is driven by increased credit demand amid weakening cash flows of borrowers because of Covid-19 induced stress.