Non-food credit growth in the banking system languished at a near two-year low of 8.72% year-on-year (y-o-y) during the fortnight ended October 11, 2019, despite the lending outreach programmes taken up by public sector banks (PSBs). The credit deposit (CD) ratio for the fortnight was lower at 75.19%, down from 75.74% in the previous fortnight. Between September 27 and October 11, non-food credit grew a mere 0.22% to Rs 97.28 lakh crore, according to provisional data released by the Reserve Bank of India (RBI).
The loan carnivals were organised between October 1-9 to coincide with the first leg of the festive season; the second leg began on Monday and will end on Friday.
The outreach programme was initiated by the government to push retail loans and banks were asked to hold loan melas in partnership with non-bank lenders in 400 districts.
Outstanding loans to companies and individuals stood at Rs 96.36 lakh crore on September 13, higher than the `96.18 lakh crore at the end of the previous fortnight, data from the central bank showed.
Deposit growth also slipped to single digits rising by 9.77% y-o-y in the fortnight ended October 11, down from 10.02% y-o-y in the previous fortnight.
During the comparable fortnight of 2018, deposits with banks had grown by 8.87%. Credit growth has been trending down, even though lending rates have been coming off following monetary easing by RBI. Banks are tempering their outlook and earlier this week Kotak
Mahindra Bank lowered its forecast for loan growth in FY20 to the mid-teens from 20% earlier.
Analysts say much of the credit squeeze is due to smaller disbursements to the industry segment. Additionally, delays in the resolution of cases in the NCLT due to litigation and interpretation of law are pulling down demand for loans.