Banks’ non-food credit growth back to double digits

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Mumbai | Updated: May 26, 2016 8:12:00 AM

Non-food credit growth has inched back to double digits at 10.01% as on May 13 compared to the same period last year, data from the Reserve Bank of India (RBI) shows.

Non-food credit growth has inched back to double digits at 10.01% as on May 13 compared to the same period last year, data from the Reserve Bank of India (RBI) shows.

Data shows that the outstanding non-food credit as on May 13 stood at Rs 71.42 lakh crore — a dip of Rs 2.86 lakh crore from the beginning of April. As on April 1, the outstanding non-food credit stood at Rs 74.28 lakh crore.

The deposit growth for the same period stands at 9.84% on a year-on-year basis with the outstanding deposit in the banking system standing at `95.42 lakh crore.

Credit growth had started to overtake deposit growth starting a few months back. Growth in the non-food credit in the banking system as on December 25 stood at 11.2% compared to the deposit growth at 10.88%. Since then the trend seems to have continued.

The lowest base rate in the banking system currently stands at 9.30% while a AAA-rated PSU can borrow at rates close to 8.15-8.20%.

Even short-term rates in the debt market are way lower than the bank lending rates. For example, the marginal cost of lending rate (MCLR) for three years for a state-owned bank stands at 9.35% where as PSUs are able to borrow at sub-eight percent levels from the debt market via three year papers.

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