 "Fortnightly bank credit growth at 4-year low")
For the fortnight ended August 8, year-on year credit growth in the banking sector fell to its lowest in above four years.
Reserve Bank of India (RBI) data showed on a year-on-year basis for that fortnight, credit grew 11.64 per cent. In the previous fortnight (ended July 25), growth was 13.29 per cent, RBI data showed. Bank credit had earlier grown 11.3 per cent in the fortnight ended December 18, 2009, in the wake of the global financial crisis.
A mid-level official with a public sector bank said besides tepid demand from the corporate sector, the arrest of Syndicate Bank's chief executive on a charge of taking bribes for credit had hit decisions. “Though an isolated event, its impact is wide across the system. Its psychological impact is substantial,” he said.
A senior Punjab National Bank executive said credit demand was not much, though there was expectation of a pick-up due to many decisions by the government. “Many projects which were stalled have been cleared but it will take a while for that to translate into loan disbursal for large projects. Retail credit growth is steady but no signs of it gathering pace in the near future,” he said.
The first half of the financial year typically witnesses lower credit growth and it picks up from the festive season which begins in September. Banks depend on retail credit during this season to drive growth. Due to this, they also announce schemes to attract borrowers to car loans and home loans, offering discounts on lending rates and waiving processing charges for loans.
Reserve Bank of India (RBI) data showed on a year-on-year basis for that fortnight, credit grew 11.64 per cent. In the previous fortnight (ended July 25), growth was 13.29 per cent, RBI data showed. Bank credit had earlier grown 11.3 per cent in the fortnight ended December 18, 2009, in the wake of the global financial crisis.
A mid-level official with a public sector bank said besides tepid demand from the corporate sector, the arrest of Syndicate Bank's chief executive on a charge of taking bribes for credit had hit decisions. “Though an isolated event, its impact is wide across the system. Its psychological impact is substantial,” he said.
A senior Punjab National Bank executive said credit demand was not much, though there was expectation of a pick-up due to many decisions by the government. “Many projects which were stalled have been cleared but it will take a while for that to translate into loan disbursal for large projects. Retail credit growth is steady but no signs of it gathering pace in the near future,” he said.
The first half of the financial year typically witnesses lower credit growth and it picks up from the festive season which begins in September. Banks depend on retail credit during this season to drive growth. Due to this, they also announce schemes to attract borrowers to car loans and home loans, offering discounts on lending rates and waiving processing charges for loans.