 "Oil companies take loans worth Rs 20,000 crore")
According to bank executives, interest rates in short-term money market segment have risen sharply and the market has almost come to a grinding halt. Many companies have stepped up use of sanctioned loan limits to meet fund requirements. Oil companies and coal importers have been prominent is drawing credit. Oil companies have drawn Rs 20,000 crore in the form of loans.
This sharp rise (in credit) was expected, said State Bank of India chairman Pratip Chaudhuri. Companies have moved away from commercial paper and external commercial borrowings (ECB).
The outstanding bank credit on August 9, 2013, was Rs 55,09,063 crore, showing a year-on-year growth of 16.6 per cent in credit, according to Reserve Bank of India (RBI) data.
M Narendra, chairman and managing director of Indian Overseas Bank, said that besides corporate demand, the good monsoon has given push for crop loans. But the spurt is temporary and may normalise over period subject to liquidity conditions.
Till early July, companies were raising funds through commercial paper as rates were cheaper in short-term money market compared to bank loan rates. But the scenario changed after RBI took steps to curb liquidity to halt the rupee fall. The money market rates have gone beyond the base rate of banks. As a consequence, the demand shifted bank-sanctioned credit.
Banks' advances rose by Rs 6,861 crore to Rs 54,05,248 crore in the fortnight ended July 26, 2013. The deposits grew by Rs 16,849 crore in the fortnight to Rs 71,03,694 crore. The deposit growth in 12 months ended August 10, 2013 was 13 per cent.