Non-food bank credit growth at 4-month high

By: | Published: July 20, 2017 3:44 AM

Growth in non-food bank credit rose to a four-month high of 7.26% year-on-year (y-o-y) during the fortnight ended July 7 from 6.71% in the previous fortnight, clocking a fourth straight fortnight of positive growth. The corresponding figure in the year-ago period was 9.44%.

SEBI, RBIData from the RBI showed that the net outstanding on commercial papers (CPs) stood at Rs 3.29 lakh crore as of June 30

Growth in non-food bank credit rose to a four-month high of 7.26% year-on-year (y-o-y) during the fortnight ended July 7 from 6.71% in the previous fortnight, clocking a fourth straight fortnight of positive growth. The corresponding figure in the year-ago period was 9.44%.

According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals rose to Rs 76.53 lakh crore from Rs76.06 lakh crore a fortnight ago.
Net corporate bonds outstanding, at Rs 24.81 lakh crore at the end of June, was up 20% from Rs 20.63 lakh crore in June 2016, as per the latest data released by Sebi.

Data from the RBI showed that the net outstanding on commercial papers (CPs) stood at Rs 3.29 lakh crore as of June 30, down from Rs 3.38 lakh crore in the previous year.

Taken together with the outstanding on corporate bonds and CPs, the total outstanding credit in the system adds up to at least `104.63 lakh crore, up 9.2% from Rs 95.81 lakh crore in the comparable period last year. Outstanding on corporate bonds and CPs for July is not available yet.

Total bank credit rose 6.41% y-o-y to Rs77.05 lakh crore, as against a 6.03% growth in the previous fortnight and 9.24% in the year-ago period.

Aggregate deposits with the banking system grew 10.71% y-o-y to Rs106.52 lakh crore. This was higher than the June 23 figure of Rs 106.06 lakh crore.

The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, rose 6 basis points (bps) from the fortnight ended June 23 to 72.33%.


The credit growth has been 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.

Analysts expect the phenomenon to continue. In a note dated June 30, brokerage Kotak Institutional Equities wrote, “The broad theme on disintermediation is likely to continue into FY2018, which would continue to hurt corporate loan growth.” The brokerage, however, added that market participants say a fair amount of lending has begun for better-rated corporates, where cash flows are relatively more predictable. This is reflected to an extent in the upward trend in non-food credit growth in FY18 so far.

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