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Credit offtake continues to clip at double-digits

Monday, February 05, 2018

Credit growth continued to remain in double-digits clocking 10.58% at Rs 81,71,399 crore in the fortnight to January 19, according to the latest RBI data.

In year ago fortnight ending January 20, 2017, banks advances had stood at Rs 73,89,528 crore.

But credit growth in the reporting period was slightly lower than the previous fortnight when it grew by 11.11% at Rs 82,05,644 crore as against Rs 73,84,568 crore in the year-ago fortnight.

In December 2017, the non-food credit rose by 10 % compared to an increase of 4% in December 2016.

Credit to agriculture and allied activities increased 9.5% in December, in comparison to an increase of 8.2% in December 2016.

Deposits grew 5.10% in the fortnight to January 19, 2018 at Rs 1,09,77,980 crore as against Rs 1,04,45,112 crore in the previous fortnight.

The growth in bank credit has outpaced deposits from the last few months.

Rating agency Icra, in a note, had said it expected banks to hike deposit rates in the near term, as incremental credit has outpaced deposits over the last quarter.

The incremental credit in the current financial year (till January 5, 2018) stood at Rs 2.02 trillion, far outpacing additional deposits of Rs 1.27 trillion.

The rating agency further said the recent capital allocation of Rs 88,139 crore into state-run lenders under the recapitalisation programme will improve the ability of public sector banks to pursue credit growth in the coming months. It said while banks have an option of reducing their excess SLR holdings and deploying the same towards incremental credit, they may prefer not to do so, as it may trigger an upward movement in bond yields and add to their treasury losses.

"Therefore, we anticipate an imminent increase in competition for deposit mobilisation and an upward movement in deposit rates," Icra had said in the report.

The nation's largest lender State Bank has raised its bulk deposit rates between 50 basis points to 140 basis points on various maturities on deposits between Rs 1 crore and above Rs 10 crore.

This is the second revision by the bank in the last two months. It had revised bulk deposit rates in November last year.

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