Credit offtake of banks doubles YOY

Credit offtake in the banking sector has more than doubled to Rs 1,62,463 crore (year-on-year) as on August 6, 2004, from Rs 76,205 crore in the previous year, according to the latest Reserve Bank of India (RBI) statistics.

So, even as rising interest rates sends alarm bells across dealing rooms of banks, the hit on their bond portfolios could be more than compensated by the growth in their loan books.

According to the RBI weekly statistical report released on Saturday said, there has been a significant increase in non-food credit to 1,63,272 crore (Rs 91,807 crore), while food credit has declined by Rs 809crore against a larger reduction of Rs 15,602 crore in the previous year.

If one were to look at the financial year so far, there is also a significant increase in bank credit to Rs 51,443 crore as against a drop of Rs 550 crore in the corresponding period of the previous year.

During the period, non-food credit increased by about eight fold to Rs 44,962 crore (Rs 6,722 crore) and food credit rose to Rs 6,481 crore up from a dip of Rs 6,228 crore.

While the credit offtake is growing, banks are reducing their investments in government bonds which have been hit hard with the rise in interest rates.

On a year-on-year basis, banking sector's investment book has been reduced to Rs 1,14,220 crore from Rs 1,27,713 crore in the previous year.

During the current financial year, the investment book grew by Rs 51,839 crore as against Rs 72,212 crore growth in the corresponding period of the previous year.