The bank credit growth (year-on-year basis) slowed down further to 5.14 per cent in the fortnight ended September 25, 2020 from 5.3 per cent in previous fortnight ended September 11, 2020.
However, sequentially, the credit growth showed signs of a pickup. According to Reserve Bank of India data, bank credit rose by Rs 44, 210 crore to Rs 102.71 trillion during the reporting fortnight (September 25, 2020). The credit had expanded by Rs 13,198 crore in the previous fortnight (September 11, 2020). The credit of commercial banks stood at Rs 97.68 trillion as on September 27, 2019.
Bank executives said the increase in activity in the last fortnight of the second quarter was due to a rise in retail credit, some of which was pent-up demand. Moreover, corporates have drawn limits before closing books for the quarter ended September.
While gradual unlocking process in the economy is underway, the demand for credit remains muted and people and firms are holding money in accounts. The severe disruption in the economic activity due to the stringent lockdown imposed to contain the spread of the coronavirus (Covid-19) pandemic has impacted credit demand.
The deposits of commercial banks in India rose by 10.51 per cent in the reporting fortnight (September 25, 2020), compared to the 12 per cent reported for the previous fortnight. The deposits pool rose by Rs 15,632 crore to Rs 142.63 trillion on September 25, 2020 from Rs 142.48 trillion at end of the previous fortnight.
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