Private sector banks have recorded higher credit growth than their state-owned counterparts on a year-on-year basis.
According to latest data by the Reserve Bank of India (RBI), private banks saw 28 per cent growth in bank credit at the end of December 31, while public sector banks recorded a rise of 24.1 per cent. During the same period last year, private banks had registered 8.4 per cent growth whereas public banks had seen 16.9 per cent increase in credit growth. Foreign banks witnessed an 19.8 per cent increase compared to a decline of eight per cent in the same period last year.
Public sector lenders, however, accounted for around three-fourth of the incremental year-on-year credit off-take at the end of the third quarter.
ICICI Bank, the largest private sector lender which was shrinking its balance sheet for the last few quarters, registered an increase in advances in the third quarter. The bank’s advances rose 15.3 per cent to Rs 2,06,692 crore on December 31, from Rs 179,269 crore on December 31, 2009.
Most private sector banks which have declared third-quarter results have seen a substantial increase in loan offtake.
Credit growth getting broad-based
Despite most of the lending to the infrastructure sector, credit growth was gradually getting broad-based, said RBI.
Infrastructure, basic metal and metal products and engineering industries accounted for two-third of the annual incremental credit off-take as on December 17, 2010.
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Also, with economic growth consolidating around the pre-crisis levels, non-food credit continued to grow at an accelerated pace during the third quarter. It recorded 24.4 per cent growth at the end of December.
“With deposit mobilisation lagging the fast pace of increase in credit, the incremental non-food credit to deposit ratio peaked at 110.5 per cent in mid-December 2010,” said RBI.
As a result of high credit demand and low deposit growth, banks’ investments in statutory liquidity ratio securities declined compared to last year.
Fund flow to commercial sector
Banks accounted for nearly three-fifth of total incremental financing to the commercial sector during April-December 2010. At the same time, funding from non-bank sources registered a decline compared to the previous year, on account of a decline in funding from both domestic and foreign non-bank sources.
| STRONG DEMAND CREDIT FLOW FROM SCHEDULED COMMERCIAL BANKS (RS CRORE) | |||||
| Item | Outstanding as on | As on March 27, 2009 | As on March 26, 2010 | ||
| Amount | Per cent | Amount | Per cent | ||
| Public Sector Banks | 27,93,705 | 3,25,608 | 16.9 | 5,41,737 | 24.1 |
| Foreign Banks | 1,90,766 | -14,028 | -8.1 | 31,474 | 19.8 |
| Private Banks | 6,89,232 | 41,424 | 8.4 | 1,51,618 | 28.2 |
| All Scheduled Commercial Banks* | 37,63,213 | 3,66,914 | 13.8 | 7,38,641 | 24.4 |
| *: Including Regional Rural Banks Source:RBI | |||||
Funding from non-bank sources fell five per cent while overseas foreign currency borrowings fell four per cent during the period.
A lower net FDI inflow and lower subscription to American and global depositary receipts resulted in a decrease in funding from foreign sources.