Non-food credit grows 5.18%, deposits with banks rise too

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Mumbai | Published: February 4, 2017 3:20:23 AM

Non-food credit grew 5.18% on a year-on-year (y-o-y) basis to Rs 73.13 lakh crore for the fortnight ended January 20, according Reserve Bank of India data.

Arun Jaitley, Narendra Modi, Union Budget 2017, PSU, Indradhanush roadmap, Fiscal year,Public Sector Banks, Finance MinisterLenders have been banking on interest rate cuts to push demand for credit. (Reuters)

Non-food credit grew 5.18% on a year-on-year (y-o-y) basis to Rs 73.13 lakh crore for the fortnight ended January 20, according Reserve Bank of India data. This marks a slight improvement from 5.12% clocked in the previous fortnight.

Deposits with the banking system rose 13.85% y-o-y during the fortnight under review to Rs 104.9 lakh crore. The number is marginally lower than the previous fortnight’s figure of Rs 105.8 lakh crore. The fortnight ended November 25 had seen record deposit growth of 15.92% on a y-o-y basis owing to the government’s decision to demonetise Rs 500 and Rs 1,000 bank notes.

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Lenders have been banking on interest rate cuts to push demand for credit. The last few weeks have seen banks and housing finance companies aggressively slashing lending rates in an attempt to stoke retail credit demand.

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The country’s largest lender, State Bank of India (SBI), on January 1 reduced its one-year marginal cost of funds-based lending rate (MCLR) by 90 basis points (bps) to 8% and increased the spread over MCLR for most retail loans. Other lenders have followed suit, bringing down their MCLRs by between 15 and 90 bps.

According to ICICI Bank MD & CEO Chanda Kochhar, while the system retail credit is at about 15%, the segment has seen a little over 18% growth. “The second area of growth is that even on the corporate side, actually the assets that we want to go for – assets excluding stressed ones, then on the rest we are growing at 15%. So, I think these are the two areas of growth for us. The two focus areas for us are retail and the corporates in the A category,” Kochhar had said.

She added that as far as corporate loans are concerned, there is refinance and also working capital requirements, which have risen on account of price increases and capacity utilisation requirements.

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