A month into the festival season, non-food credit growth continued to be subdued and below the Reserve Bank of India’s projection of 16%, data from the the central bank showed.
In the forrnight ended November 2, non-food credit grew by 15.87% on a year-on-year basis to R47,55,808 crore. During the fortnight, banks disbursed R35,000 crore worth of loans.
Most bankers have indicated a pick-up in credit growth during the October-March period given that consumers spend more and companies also draw down on their sanctions.
The second half of the financial year is considered as a busy season for credit, and banks typically see a sharp acceleration in credit growth during this period.
However, this time around loan growth continues to flounder and raises concerns over credit demand for the year. Many banks have slashed interest rates, especially for retail customers so as to boost credit offtake. These interest rate cuts are yet to show impact, if the RBI data is anything to go by.
State Bank of India, ICICI Bank, Bank of Baroda and many others have slashed interest rates. SBI has also halved its processing fee for home and auto loans.
Meanwhile banks’ deposit growth continued to lag credit growth. Deposits grew at a pace of 13.75% on year in the said fortnight to an outstanding amount of R64,35,820 crore. During the fortnight, banks added R47,211 crore of deposits.