Although bank credit increased Rs 21,460 crore in the fortnight ended June 5, 2009, after falling by Rs 16,306 crore in the previous fortnight, the year-on-year rate of growth still remains subdued, indicating that surplus liquidity is not making its way into the economy.
Bankers said this was the first fortnight after the results of the Lok Sabha elections were announced. Though the Congress-led UPA got the mandate to form the government, bringing stability, it could be a mere coincidence that these 15 days saw a rise in credit offtake.
According to the Reserve Bank of India (RBI) data, bank credit grew 15.68 per cent to Rs 27,57,210 crore at the end of June 5, 2009, compared with the corresponding fortnight in the previous year — the lowest year-on-year growth rate in more than five years.
The year-on-year growth for the fortnight ended May 20 was 15.86 per cent. The year-on-year growth for the fortnight ended March 24, 2004, was 13.8 per cent. A senior executive of a public sector bank said banks were not finding the right borrowers and were parking their funds with the RBI.
“Many corporates have revised their business plans and some projects have been abandoned. A lot of loans that were sanctioned were never disbursed,” said the executive.
Deposits, on the other hand, grew at a robust rate of 22 per cent on a year-on-year basis to Rs 39,71,650 in the fortnight up to June 6, 2009. The investments in government paper, both of the Centre and the state, rose to Rs 12,74,935 crore from Rs 12,58,305 crore at end of May 20, 2009.