Credit offtake from banks has gathered further steam in the traditionally busy October-March season when economic activity picks up.
As per the latest data from the Reserve Bank of India, banks disbursed loans aggregating ₹79,207 crore in the fortnight ended November 9 against ₹41,501 crore in the preceding fortnight ended October 26.
In the fortnight ended October 12, banks disbursed loans aggregating ₹13,400 crore.
As of November 9, 2018, the year-on-year (y-o-y) credit growth was robust at 14.73 per cent, as per the RBI’s Scheduled Banks’ Statement of Position in India.
“Incremental credit growth for 2017-18 improved to 10.3 per cent, compared with 8.2 per cent growth in the corresponding period last year...Bank credit growth has improved further in the current fiscal.
“The bank credit offtake (y-o-y) as on end-October 2018 was at a five-year-high of 14.6 per cent. The growth this year has been fairly broad-based, with services, agriculture and industry seeing higher growth,” said CARE Ratings in a report.
Deposits see turnaround
In the reporting fortnight, banks added deposits aggregating ₹55,015 crore. This is probably due to the increase in deposit rates and investors shying away from volatile stock markets.
The preceding fortnight saw bank deposits shrink by ₹15,899 crore.
As at November 9, 2018, the y-o-y deposit growth was at 8.93 per cent. “We expect bank deposits to grow by 10 per cent (6.7 per cent in FY2018) and bank credit to grow by 10-12 per cent in 2018-19 (10.3 per cent in FY2018).
“This is taking into account the issues with PCA (prompt corrective action) of banks,” said the CARE Ratings report put together by Madan Sabnavis, Chief Economist; Kavita Chacko, Senior Economist; and Rucha Ranadive, Economist.
GDP growth
The agency is expecting the GDP to grow by 7.5 per cent in 2018-19 (6.7 per cent in 2017-18). This growth will be contingent on favourable farm output, limited pick-up in private investment, and increased private sector spending supported by continued government spending.