Loan disbursals by banks in September-December 2009 grew 12.2 per cent -- half the pace it recorded last year -- a trend that may discourage the Reserve Bank from adopting a hawkish monetary stance.
The RBI will announce its annual credit policy tomorrow and bankers expect key short-term lending and borrowing rates to be hiked in an effort to bring down inflation. During the same quarter in 2008, the annual credit growth was 23.3 per cent, according to Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks released by the Reserve Bank today.
Annual credit growth rate for State Bank of India and its group was 14.4 per cent, against 24 per cent at the end of three months ended December 2008. In case of foreign banks, loan disbursals turned negative at 9.2 per cent.
For nationalised banks, gross bank credit growth declined from 29 per cent to 15.7 per cent during the last quarter of 2009. Such a sharp decline in growth was not noticed as far as deposits were concerned.
Deposits of all scheduled commercial banks grew by 17.9 per cent compared to 21 per cent during December quarter, 2008. Going by gross credit figure, it is expected that RBI may not raise policy rates very sharply but in a gradual manner.
"My sense is that a quarter percentage point increase in CRR, repo and reverse repo rates is the right thing for RBI to give confidence and comfort to the market and to avoid any knee-jerk reactions," Yes Bank MD and CEO Rana Kapoor said.
Repo and reverse repo are the key short-term lending and borrowing rates, respectively, while Cash Reserve Ratio is the money that every bank has to keep with RBI. "RBI is likely to hike the rates by anywhere between 0.25-0.50 percentage points as inflation situation warrants monetary action," Oriental Bank of Commerce's Chairman and Managing Director T Y Prabhu said.
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The apex bank began unwinding its monetary stimulus by upping CRR by 0.75 percentage points in January and policy rates (repo and reverse repo) by 0.25 percentage points in March to cool inflation.
According to the RBI report, the number of banked centres served by scheduled commercial banks stood at 34,731. Of these, 28,021 were single office centres and 64 centres had 100 or more bank offices. The top 100 centres, arranged according to the size of deposits accounted for 68.9 per cent of the total deposits and credit accounted for 77.5 per cent of total bank credit.
In December 2008, the corresponding share of top 100 centres in aggregate deposits and gross bank credit was 69.2 per cent and 78.6 per cent, respectively.