Bank non-food credit at new high in March

Bank non-food credit zoomed by Rs 37,720 crore in March. Traditionally, March""the last month of the fiscal year""sees high credit growth, but this year's figures have surpassed all previous records. The credit figure for March is close to 30 per cent of the total non-food credit growth posted during the year.

For instance, non-food credit offtake in March 2003 was Rs 28,876 crore""even though the overall non-food credit growth last year was higher at Rs 1,42,481 crore versus Rs 1,23,237 crore this year.

In March 2002, non-food credit growth was Rs 32,205 crore, in March 2001 it was Rs 20,174 crore and in March 2000 it was Rs 26,629 crore.

The overall credit growth in March this year was Rs 38,597 crore, up from Rs 28,114 crore last March. The comparable figure for March 2002 was Rs 33,144 crore, for March 2001 Rs 20,324 crore and for March 2000 Rs 25,627 crore.

Even deposit growth in March was spectacular. Aggregate deposits went up by Rs 55,982 crore in March. Deposit growth was Rs 26,706 crore in March 2003, Rs 39,029 crore in March 2002, Rs 37,422 crore in March 2001 and Rs 36,208 crore in March 2000.

Even as the credit and deposit portfolios of banks rose sharply, investment in government securities fell by Rs 5,393 crore in March this year. This is the steepest fall in investment in gilts in the month of March compared to the corresponding period in the previous four financial years.

For instance, in March 2003 investment in gilts went up by Rs 335 crore, in March 2002 by Rs 2,750 crore, in March 2001 by Rs 5,866 crore and in March 2000 by Rs 4,875 crore.

Overall, the figures give a healthy picture of the industrial sector. Banks are building their credit portfolios and moving away from investment in government securities.

A senior official at a public sector bank attributed the sudden spurt in non-food credit to the phenomenon of banks giving ultra-short term loans, ranging between seven days and 14 days. This was not the case in the earlier financial years. Down the line, the official pointed out, this phenomenon could get exacerbated.

He also added a word of caution. "Banks typically resort to the tactic of building their loan book towards the close of the financial year. Once the April figures are out, one could witness a steep fall in non-food credit," he said.