Online BusinessCredit growth quickens, strength uncertain
The increase in credit flow till December 4 was 10.5% compared to a year ago.
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Credit extended by banks in the fortnight up to December 4 grew at a faster pace than during the previous three fortnights. The increase in credit flow was 10.5 per cent compared to a year ago. However, bankers said it remained to be seen if the momentum could be sustained.
Credit outstanding by Indian banks as of December 4 was Rs 29,19,700 crore as against Rs 26,42,221 crore a year ago. Banks disbursed Rs 20,930 crore in the fortnight up to December 4, compared to Rs 7,056 crore in the previous fortnight (up to November 20), according to data released by the Reserve Bank of India (RBI).
In the corresponding fortnight last year, the total credit outstanding had grown by Rs 9,400 crore.
“There are signs that credit growth is picking up, but it is too early to comment. I am not sure if the momentum will be sustained,” said the credit head of a large private sector bank.
CATCHING UP
Fortnightended
Credit
flow
Y-o-Y
growth
Deposit
mobilised
Y-o-Y
growth
April 10
1,429.00
18.80
70,726.00
22.10
April 24
-25,266.00
18.10
21,956.00
22.50
May 8
5,882.00
17.20
29,260.00
22.60
May 22
16,306.00
15.86
15,730.00
22.56
June 5
21,460.00
15.70
3,656.00
22.00
June 19
13,006.00
15.80
-5,502.00
22.00
July 3
28,532.00
16.30
62,559.00
21.90
July 17
-21,185.00
15.34
-18,656.00
21.78
July 31
29,471.00
15.79
59,338.00
21.79
August 14
-5,062.00
14.90
9,338.00
21.80
August 28
5,612.00
14.09
21,616.00
20.51
September 11
18,374.00
13.24
8,123.00
20.19
September 25
47,197.00
12.62
30,215.00
19.79
October 9
17,160.00
10.75
41,347.00
19.98
October 23
-21,750.00
9.65
8,408.00
19.02
November 6
23,147.00
9.78
14,360.00
18.55
November 23
7,057.00
10.08
18,617.00
19.03
December 4
20,930.00
10.50
17,713.00
18.32
Note: Figures in Rs crore, y-o-y growth (%) at the end of fortnight
Source: RBI
The chief financial officer of a large private sector bank said credit growth had started picking up, but was not strong yet. “Companies are mostly borrowing for working capital loans. For short-term funds, they are also looking at other sources,” he added.
Banks have extended Rs 1,82,000 crore loans so far in the financial year —6.2 per cent more the figure at the end of 2008-09. The central bank has forecast 18 per cent growth for 2009-10, but bankers said the target was unlikely to be met.
In the fortnight up to December 4, banks added Rs 17,713 crore deposits, taking the total outstanding to Rs 42,03,645 crore.
Total outstanding deposits as of December 4 grew 18.32 per cent compared to a year ago. With inflation growing at a scorching space, it is expected that RBI will take monetary action to rein in excess liquidity.
However, with credit demand still shaky, bankers said they might not be in a position to take cues from RBI’s moves and hike interest rates.
“RBI might make other moves such as floating MSS (market stabilisation scheme) bonds to suck out excess liquidity,” said a senior executive of a public sector bank.