Non-food credit growth hits one-year high of 9%

By: | Published: November 25, 2017 3:24 AM

The non-food bank credit growth rate rose to a one-year high of 9% year-on-year (y-o-y) during the fortnight ended November 10. Growth in the preceding fortnight was 7.8% and it was 8.25% in the corresponding period of the previous year.

non food bank credit, Securities and Exchange Board of India, rbi, Bank deposits, credit deposits, net corporate bonds, demonetisationData on outstandings on corporate bonds for October and November are not available yet. (Reuters)

The non-food bank credit growth rate rose to a one-year high of 9% year-on-year (y-o-y) during the fortnight ended November 10. Growth in the preceding fortnight was 7.8% and it was 8.25% in the corresponding period of the previous year. The y-o-y jump in credit comes on a low base as banks had seen a dip in credit offtake in the corresponding period in 2016 after the announcement of demonetisation on November 8. According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals rose to Rs 78.89 lakh crore from Rs 78.54 lakh crore a fortnight ago. The net corporate bonds outstanding, as at the end of September, was Rs 25.87 lakh crore, up 18% from Rs 21.95 lakh crore in September 2016, as per data released by Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers stood at Rs 4.81 lakh crore as on November 15, up 17.5% from Rs 4.09 lakh crore in the previous year.

Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to around Rs 109.57 lakh crore, up 11% from about Rs 98.7 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for October and November are not available yet. Bankers and sector analysts have in recent days made a case for measuring credit growth in terms of outstandings on loans and bonds, as better-rated corporates are borrowing increasingly from the money markets. Total bank credit rose 8.65% y-o-y to Rs 73.24 lakh crore. Conversely, deposits with banks grew the slowest in more than five years at 8.14% y-o-y, as the effect of a high base kicked in.

Banks had seen a deluge of deposits soon after demonetisation was announced. Bank deposits stood at Rs 108.87 lakh crore as on November 10, 2017, up from Rs 101.15 lakh crore on November 11, 2016. The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, rose 8 basis points (bps) from the previous fortnight to 72.47%. While bank credit has recovered a little in the last few months, analysts say much of the growth is being driven by the retail segment in an environment of muted corporate demand.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition