During the comparable fortnight a year ago, non-food credit growth stood at 11.86%
Non-food credit, or loans to individuals and companies, grew 14.43% year-on-year (y-o-y) during the fortnight ended February 1, marginally slower than the 14.56% reported in the previous fortnight. During the comparable fortnight a year ago, non-food credit growth stood at a much lower 11.86%.
Meanwhile, deposits with the banking system grew 9.63% y-o-y to Rs 121.23 lakh crore as on February 1, a shade slower than 9.69% in the previous fortnight. During the comparable fortnight of 2018, deposits with banks had grown only 5.69%.
Double-digit growth has been eluding bank deposits for over a year now, although the rate of growth had nudged 10% in the fortnight ended January 4, 2019.
According to provisional data released by the RBI, outstanding loans to companies and individuals stood at Rs 93.62 lakh crore on February 1, up from Rs 92.61 lakh crore on January 18 and Rs 82.09 lakh crore a year ago. Credit growth has been recovering from record lows over the past few quarters with the banking system shaking off the impact of demonetisation and a bulk of lenders pivoted towards retail lending. Bankers now sound increasingly optimistic about growth trends in credit offtake.
Rajnish Kumar, chairman, SBI, had told reporters after the bank’s Q2FY19 results that it has returned to double-digit growth on the domestic front. “Our credit growth is in line with the guidance for 10-12% credit growth for the financial year 2018-19,” Kumar said. SBI recorded a loan growth of 15.65% y-o-y in the December quarter.
Much of the growth is coming from the retail segment, particularly from unsecured products. After ICICI Bank’s Q3FY19 results, chief financial officer Rakesh Jha told analysts that unsecured loans have been growing over a low base. “The growth that we have seen is across portfolios; so unsecured portfolio does see a higher growth, but that is primarily because we have been underpenetrated on that portfolio. The growth is coming off a smaller base,” Jha said.
Growth in corporate lending is being driven largely by the government. SBI’s Kumar said: “Most of the growth is coming from a lot of government undertakings. In power, you can see that the growth is mostly coming from public sector undertakings in generation and transmission sector. Roads and ports, again 93.7% growth is coming from only the government sector.”