Green shoots: Bank credit growth at 14.4 per cent, deposits 10 per cent

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Mumbai | Updated: March 28, 2019 7:21:58 AM

Bank deposit growth in the fortnight ended February 15 was at 10.2%, the highest in at least one-and-a-half years, the data showed.

bank credit, scheduled commercial banks, Non-food credit, RBI, bank deposit, market newsBank credit is expected to grow at 13-14% on average between FY19 and FY20. (Reuters)

Non-food credit grew 14.4% y-o-y during the fortnight to March 15, marginally slower than the 14.5% y-o-y growth in the previous fortnight. During the comparable fortnight a year ago, the non-food credit growth of the scheduled commercial banks (SCBs) stood at 11.36%, data from the RBI showed.

Meanwhile, deposits in the banking system grew by 10% y-o-y during the fortnight ended March 15 — faster than the 9.8% y-o-y growth reported in the fortnight to March 1. Bank deposit growth in the fortnight ended February 15 was at 10.2%, the highest in at least one-and-a-half years, the data showed. “The growth in loans is predominantly coming from consumption-led loans from the retail segment. Within the retail segment the growth in unsecured loans is higher than secured loans. In deposits, we usually see a growth in March as we approach the end of the fiscal,” said Virat Diwanji, president, retail liabilities & branch banking at Kotak Mahindra Bank.

Bank credit is expected to grow at 13-14% on average between FY19 and FY20, significantly faster compared with the 8% in FY18, which would force a change in the deposit mobilisation plans of banks over the medium term, said the experts at Crisil Ratings. To meet this credit growth, banks will have to raise about Rs 25 lakh crore over the two fiscals, observed the experts.

CD ratio of the SCBs stood at 85.5% in the fortnight to March 15, compared to 77.90% in the previous fortnight. However, a year ago, the CD ratio of the banks was at 75%, showed the RBI data.

“Credit growth has shown a double digit improvement in the entire year. This is because of the consistent demand of the credit from the industry, and after the liquidity crisis in the NBFC sector, the credit demand in the scheduled commercial banks has further increased. The absolute growth in the credit has also been more than the absolute growth in deposits, which has also led to an increase in the CD ratio.” said Ashutosh Khajuria is the executive director and chief financial officer (CFO) of Federal Bank.

Taken together with loans, consolidated credit outstanding in the system stands at Rs 129.47 lakh crore as of March 15, up 13.2% from Rs 114.33 lakh crore in the comparable period a year ago.

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