Growth in non-food bank credit improved to 8.42% year-on-year (y-o-y) during the fortnight ended October 13 from 7.46% in the previous fortnight. The corresponding figure in the year-ago period was 9.01%. According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals fell to Rs 78.52 lakh crore from Rs 79.62 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 the Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers stood at `4.8 lakh crore as of October 15, up 16.5% from Rs 4.12 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 at least Rs 109.19 lakh crore, up 10.8% from Rs 98.49 lakh crore in the comparable period last year. Outstandings on corporate bonds for the first fortnight of October are not available yet. Total bank credit rose 7.7% y-o-y to Rs 79 lakh crore. Aggregate deposits with the banking system grew 9.77% y-o-y to Rs 108.79 lakh crore, up from Rs 109.68 lakh crore a fortnight ago. The credit-deposit (CD) ratio of the banking system, or the proportion of deposits deployed as loans, fell 85 basis points (bps) from the fortnight ended September 29 to 72.17%.
While much of bank credit growth is being driven by retail loans and loans for working capital or refinancing, bankers are preparing for a turnaround. Speaking after HDFC Bank’s September quarter results, deputy managing director Paresh Sukthankar said that while currently the bank is seeing growth on the working-capital side, over the next 12-18 months, if demand related to capital expenditure picks up, HDFC Bank will participate in that.
He added that the bank’s investments in corporate debt and commercial papers saw a drop between September 2016 and September 2017.