Despite increase in lending rates, NBFCs push credit demand by 14.4% to a five-year high

By: | Updated: November 11, 2018 4:39 PM

This growth is at a five-year high, after the 16.6 per cent achieved by the system in October 2013 and the data come amid reports of an increase in demand from the troubled non-bank finance companies (NBFCs) from banks.

NBFCs push credit demand by 14.4% to a five-year high

Despite the overall increase in lending rates, for first time in over five years, bank credit rose by a healthy 14.41 per cent during the fortnight to October 26, the Reserve Bank has said.

This growth is at a five-year high, after the 16.6 per cent achieved by the system in October 2013 and the data come amid reports of an increase in demand from the troubled non-bank finance companies (NBFCs) from banks. NBFCs are facing liquidity pressure and has around Rs 60,000 crore worth repayments between November 1 and 9.

READ ALSO | Rupay shines! From limited presence in 2013 to capturing half of market now; 3 reasons behind phenomenal rise

another Rs 90,000 crore repayments by the end of the month, of Rs 70000 crore are commercial paper redemption. Provisional figures released by the central bank showed the overall bank credit increased 14.41 per cent to Rs 93.01 trillion as of October 26 from Rs 81.29 trillion in the year ago period. Bank credit grew 4.45 per cent for the fortnight to October 12, the data show.

READ ALSO | NBFC crisis poses more growth headwinds, says report

According to reports, NBFCs are finding it difficult to secure short term funding from the money markets and are increasingly looking up to banks for their liabilities. Money markets have been impacted following the defaults by IL&FS. Apart from that, analysts say liquidity problems at NBFCs offer an opportunity for the banks for recoup their market shares by lending directly to the segments served by the shadow banks. A host of banks, starting with the largest lender SBI, have shown greater confidence on credit growth for the ongoing fiscal year in recent management commentary.

The systems deposit growth came in at 8.83 per cent to Rs 120.71 trillion, which however is marginally down from previous fortnight of on October 12, when it had stood at Rs 120.87 trillion, the RBI said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition