Non-food bank credit grew 7.28% year-on-year (y-o-y) during the fortnight ended September 1. The growth in non-food credit was at a five-month high of 7.42% two fortnights ago. According to data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals rose to Rs 77.19 lakh crore from Rs 71.96 lakh crore in the same fortnight last year.
The net corporate bonds outstanding of Rs 24.81 lakh crore at the end of June was up 20% from Rs 20.63 lakh crore in June 2016, as per data released by the Securities & Exchange Board of India. Data released by the RBI showed that the net outstanding on commercial papers (CPs) stood at Rs 3.59 lakh crore as of August 15, down from Rs 3.86 lakh crore in the same period last year.
Taken together with outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to at least Rs 105.6 lakh crore. Outstandings on corporate bonds for July and August are not available yet. Total bank credit rose 6.4% year-on-year to Rs 77.69 lakh crore. Aggregate deposits with the banking system grew 9.6% Y-o-Y to Rs 107.47 lakh crore, down from Rs 107.58 lakh crore two fortnights ago.
Loan offtake was subdued in recent quarters in an environment of muted private sector investment. In addition, increased levels of disintermediation have also hurt demand for bank credit.
Bankers and sector analysts have in recent days made a case for measuring credit growth in terms of outstandings on loans as well as bonds as better-rated corporates are borrowing increasingly from the money markets.
Speaking after State Bank of India’s (SBI) June quarter results, managing director B Sriram said that between June 2016 and June 2017, around Rs 40,000 crore had moved from the bank’s loan book to the markets. “A large portion of it – about 70% – is in the CPs, or commercial papers. These commercial papers swing between the loan book and the markets, depending on the price, availability, etc,” he had said.