Deposits with Indian banks rose by R1.31 lakh crore, or 1.3%, between October 28 and November 11, according to data released by the Reserve Bank of India (RBI) on Wednesday.
Deposits with Indian banks rose by R1.31 lakh crore, or 1.3%, between October 28 and November 11, according to data released by the Reserve Bank of India (RBI) on Wednesday. The amount includes deposits received by banks during the first two working days after the announcement of the decision to demonetise R500 and R1,000 notes on November 8.
Non-food credit offtake grew a mere 8.25% y-o-y, lower than the 9.23% growth recorded in the fortnight ended October 28. In the year-ago period, non-food credit growth stood at 9.7%.
This was the highest rate of growth in deposits in 15 months, while the non-food credit growth was the slowest in at least four years.
More than 90% of the total deposits of R101.15 lakh crore were in the form of time deposits. Of the incremental R1.3 lakh crore that flowed in during the fortnight under review, approximately R1 lakh crore came in as time deposits with the rest flowing into current and savings accounts.
Deposits grew 11.7% year-on-year during the fortnight under review, as against 9.82% y-o-y during the previous fortnight.
Analysts expect that the demonetisation of high-value currency notes could hit credit demand indirectly. In a note dated November 21, investment bank Jefferies cut its credit growth expectation for the current financial year to 6% from 12%, stating that the reduction of cash-in-hand with people could cause a drop in discretionary consumption. As consumers adjust to the new currency regime, spending could slow down, with a recovery taking at least between two and six quarters, it said.
* “Private investments have been weak and unlikely to improve under these conditions and related sectors like CV (commercial vehicles) could see tempered growth expectations. Street expects public investments to improve – while money could be allocated, execution will cap the upside,” Jefferies wrote.