Indian banks’ credit growth lagged the growth in deposits for the fifth straight fortnight, RBI data showed on Wednesday.
Non-food credit grew 14.87% to an outstanding of R58.81 lakh crore in the fortnight ended January 24. Deposits grew at a faster pace of 15.68% in the same fortnight to R75.52 lakh crore.
Unlike the trend seen in earlier years, loan growth has been slipping in the last quarter. Typically, in a financial year, the last quarter sees a spurt in credit growth as banks push loans to build bigger balance sheets for the year end.
During October-December, the banking system’s loan growth was averaging 16%. This has dropped to 14.5% in January. The slack loan growth has been attributed by bankers to slower disbursal of corporate loans even as the retail loan portfolio sees healthy expansion.
For instance, ICICI Bank, the second largest lender, saw a small 11% growth in its corporate loan portfolio for the October-December quarter against a retail loan growth of 22%. In the current quarter as well, banks are unlikely to see a significant pick-up in loan offtake to industry.
Even in the corporate loan portfolio, most of the growth has been through refinancing and working capital, according to bankers. RBI has projected the credit growth for 2013-14 at a slower 15%.
Meanwhile, banks’ deposit growth has picked up, helped by the RBI’s push to raise foreign currency non-resident deposits through concessional swap windows.
Nevertheless, deposit growth has held up even after the swap windows concluded in November and banks went slow on their FCNR deposits.
In the fortnight ended January 24, time deposits grew 14% y-o-y to an outstanding R68.57 lakh crore. Demand deposits, which includes low-cost current and savings account deposits, grew by 15.85% to an outstanding R6,95,800 crore.