Reflecting moderation in economic growth, bank credit rose 16.5 per cent year-on-year in the first quarter of this financial year. The comparative growth a year before was 19.9 per cent.
The pace of deposit mobilisation, at 13.3 per cent (year-on-year), continued to lag growth in advances, according to data released by the Reserve Bank of India (RBI).
Showing a spurt in quarter-end activity, banks disbursed loans worth Rs 46,187 crore in the fortnight ended June.
Credit in the system was Rs 47,60,847 crore. In the previous fortnight (ended June 15), banks had given loans worth Rs 2,466 crore.
Growth in deposit also showed an improvement. Banks raised deposits worth Rs 1,15,042 crore in June 16-29 as against a decline of Rs 23,634 in the 15 days ended on June 1. The deposits in the system were Rs 62,29,173 crore.
Banks tend to work on quarter-ending targets. Thus, typically, deposits and loans disbursals rise in last fortnight of every quarter, said an analyst.
Credit growth and deposit growth have, however, fallen year-on-year from last fortnight. Last fortnight, bank credit grew nearly 18 per cent and deposits 14.3 per cent.
RBI has already voiced its concern over slow growth of deposits, in a recent meeting with bankers.
Typically, there is a spike in deposits towards the end of every quarter, as people and institutions tend to park their surplus money. Also, the recent deregulation of NRE deposits have brought a good amount of money into the system, said a senior executive of a public sector bank.
There was fresh demand for loans, especially from the agriculture sector, as the monsoon has started. Banks have also reduced their spreads across some segments such as small and medium enterprises without changing their base rates.
Thus, banks have seen demand for fresh loans from these sectors, he said, explaining the demand.
RBI has projected a growth of 16 per cent in deposits and 17 per cent in advances this financial year.
