Banks’ deposits grew higher than credit for the fortnight ended November 15, driven by a strong growth in term deposits. Outstanding deposits grew 11.2% while outstanding credit increased by 11.1% during the fortnight, showed the latest Reserve Bank of India data.
Outstanding deposits of banks increased to Rs 218.5 lakh crore in the period under review, from Rs 196.5 lakh crore in the same fortnight previous year. Bank credit reached Rs 173.6 lakh crore from Rs 156.2 lakh crore.
Term deposits grew by 11.5% to reach Rs 193.4 lakh crore during the reviewed quarter.
The convergence in deposit and credit was seen in the previous fortnight as credit grew by 11.9% and deposits increased by 11.83%.
The growth in deposits have come after banks intensified efforts to strengthen their liability franchise and have offered higher term deposit rates. Additionally, lenders are sourcing funds via the certificates of deposits at a relatively higher cost. While deposits have shown an increasing trend over the past few months, the credit growth has moderated due to regulatory pressures. The RBI has urged banks to slow down the growth in personal loans. The banking sector regulator hiked risk weights for personal loans in November last year.
In the previous fortnight ended on November 1, outstanding deposits stood at Rs 220.3 lakh crore, while outstanding credit was Rs 174.4 lakh crore.
According to RBI data, non-food credit of banks registered a growth of 12.8% in October, against 15.5% in the year-ago period. In October, non-food credit stood at Rs 167.54 lakh crore, against Rs 148.52 lakh crore in the same month last year.
Personal loans registered a growth of 15.8% YoY to Rs 52.79 lakh crore in October 2024, compared with an 18% growth in the same month last year. This slowdown was largely due to a decline in growth in other personal loans, vehicle loans and credit card outstanding.
Housing, the largest constituent of the personal loan segment, recorded a year-on-year growth of 17.8% in October, compared with 14.3%. Credit to agriculture and allied activities registered a growth of 15.5% in October, compared with 17.4% seen in the same month of last year. Loans to industry witnessed a YoY growth of 8% in October, compared with 4.8% a year ago.