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Credit in the banking system has received a festive boost and surged by 11 per cent in the past one year. Prior to this, bank credit this year since March had been showing a downward trend and slipped to single digits in September 2014. Now, once again credit growth has inched up to double digits from 9.72 per cent recorded at the end of September 19.
In the period ended October 3, bank credit was at Rs 62,69,007 crore from Rs 56,50,107 crore a year ago, up by 11 per cent, suggests Reserve Bank of India data.
On a year-on-year basis, the rate of growth in bank credit in September has been the slowest since June 2011 because of the economic slowdown.
In the past fortnight, credit growth in the banking system has been two per cent.
According to RBI data, over the fortnight ended October 3, bank credit in the system increased to Rs 62,69,007 crore from Rs 61,46,526 crore in the fortnight ended September 19.
Banks had been betting on the festive season for credit growth to pick up. In order to boost growth, lenders have announced various schemes in the festive season to woo customers. These schemes are for retail loans and include discounts on interest rates and processing fees in the auto and home loan space.
Apart from discounts, banks have also increased tie-ups with retailers to boost credit card growth. Typically, banks say that during the festival season, credit card spends typically increase by 20-25 per cent, as compared to the previous quarter.
Apart from the festive season, with the economy showing signs of improvement and the markets also inching up, lenders are hoping that credit demand from the corporate sector may show some improvement in the third and the fourth quarter of this financial year.
Deposits, on the other hand, grew by 13 per cent to Rs 82,89,310 crore at the end of October 3 as compared to a year ago. Over the fortnight also, deposits inched up by two per cent.
