With non-food credit from banks growing at over 15% for the second consecutive fortnight, India Inc?s clearly back in business. The amount of money that banks lent to companies and individuals grew at 15.43% year-on-year for the fortnight ended February 12. That?s around 20 basis points higher the growth seen in the previous fortnight ended January 29.
Bankers confirm that credit offtake is increasing. ?It?s true that credit growth is robust. In our bank for instance, both retail loans and loans to small & medium enterprises are growing at over 20 %,? said Bank of Baroda executive director RK Bakshi. He observes that while the demand from larger corporates wasn?t too strong a few months back, it is now improving.
Says Kotak Mahindra Bank executive director Dipak Gupta, ?We are seeing a pick-up in loan growth across sectors whether it?s from large corporates, small & medium enterprises or retail customers.? Gupta believes the growth momentum should continue. Adds Romesh Sobti, CEO & MD of IndusInd Bank, ?Demand for credit from corporates is strong and we are almost approaching the peak levels of lending that we hit in 2008 before the slowdown.?
Given the abundant liquidity in the system over the past six to eight months, companies have been accessing non-banking sources for their requirments.
Nevertheless, bankers now assert that demand for credit, especially from the corporate sector, is increasing and the Reserve Bank of India?s (RBI) targeted credit growth for 2009-10 of 16% should be achieved.
According to data released by RBI, total credit growth (including food credit) for the fortnight ended February 12, 2010, stood at 15.07% compared with the growth of 14.83% reported for the previous fortnight. The credit outstanding with borrowers was at Rs 30,51,676 crore, for the fortnight ending February 12, 2010. In its recent monetary policy, RBI had lowered its credit growth target for the banking sector for the current fiscal year to 16% from the 18% that it had targeted in October 2009.
Meanwhile, deposits (both time and demand) have grown by 16.59% year-on-year to Rs 42,99,843 crore. RBI in its January credit policy had reduced its deposit growth rate target to 17% from 18%.
