Non-food credit disbursal of banks grew at 13.16% y-o-y to Rs 67.61 lakh crore in the fortnight ended April 3, according to RBI data. This is the fastest growth in close to nine months.
The reported spurt comes a fortnight after the banking system reported a 21-year-low growth in non-food credit at 9.75% y-o-y. Deposit growth also bounced back to 12.78% in the fortnight ended April 3 from a 51-year-low of 11.42% in the fortnight ended March 20.
While time deposits have grown 11.47% y-o-y in the April 3 fortnight to Rs 79.59 lakh crore, demand deposits grew at 25% y-o-y to Rs 9.52 lakh crore.
With project loan sanctions hardly growing and the pipeline dry for many banks, the only boost to loan growth came from the retail segment.
The pace of loan disbursals to companies has plunged massively with some banks reporting a shrunk portfolio. According to an SBI official, project loan sanctions have been almost nil. However, bankers believe that credit growth will pick up in FY16 with many new projects coming up.
The only solace has been from working capital loan disbursals and these, too, have picked up only during the last couple of months. Lack of loan demand from companies has not only been due to no incremental capital expenditure, but also because many companies have turned to more lucrative and cheaper borrowing options, such as bonds.
Top banks have cut base rates over the last one week, which could see cause some uptick in credit demand. Companies have also taken recourse to commercial paper issuances rather than working capital loans in many cases. Meanwhile, corporate bond issuances totalled Rs 3.15 lakh crore until January and CP issuances have totalled Rs 1.5 lakh crore.
