Bank advances grew by 29.8 per cent on a year-on-year basis to Rs 27,21,732 crore at the end of November as against 22.5 per cent a year ago. The growth was partly due to demand from oil companies and increasing dependence of Indian companies on domestic resources rather than global markets.
From April to November 2008, loan growth was 15.2 per cent as against 8.6 per cent during the same period previous year, according to the Reserve Bank of India (RBI) data. The non-food credit grew 58.5 per cent to Rs 26,71,339 crore during the one year period.
| FACT-SHEET | ||
| (Growth in %) | 2007 | 2008 |
| Advances | ||
| End-Sept | 22.1 | 24.8 |
| End-Oct | 23.4 | 28.5 |
| End-Nov | 22.5 | 29.8 |
| Deposits | ||
| End-Sept | 24.3 | 19.8 |
| End-Oct | 26.4 | 20.7 |
| End-Nov | 24.9 | 23.6 |
Oil companies have larger share in the non-food credit as they were forced to borrow in larger volumes due to under-recovery from customers. Even though crude prices have declined sharply, reducing need for funds, the outstanding credit to oil marketing companies remained high, said bankers.
“The rollover for overseas loans, including suppliers’ credit could not happen in October and early November. Hence, the loan was repaid in dollars and fresh credit was raised in rupees. This raised the quantum of advances in the domestic market,” a senior executive of State Bank of India said.
The reported credit growth is much above RBI’s estimate of 20 per cent for 2008-09.
“After a slew of measures by the regulator, the liquidity position of banks improved. Subsequently, most of the pending proposals, such as short-term credit to oil companies and corporates, were sanctioned. That apart, credit offtake in the agriculture sector generally improves after October,” said Union Bank of India Executive Director T Y Prabhu.
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“The central bank opened a special window for non-banking financial companies (NBFCs) and mutual funds (MFs) in November. Cash-strapped financial institutions have borrowed from banks during this period,” said an executive from a public sector bank.
On the backdrop of domestic risk aversion, deposits grew by 23.6 per cent to Rs 36,49,506 crore till November on a year-on-year basis. Demand deposit, or deposit for a tenure of less than one year, stood at Rs 4,65,349 crore, whereas time deposit, or deposit with a tenure of more than a year, stood at Rs 31,84,157 crore.