Banks’ loan growth continues its southward journey, as loan growth on a year-on-year basis fell to 17.67 per cent as on this November 18, the lowest since May 2010. The Reserve Bank of India predicts an 18 per cent loan growth for the current financial year.
Bankers are of the view that it is the current economic scenario tha thas led to moderation investments; hence, a decline in credit growth.
“Investments have dropped on the whole,” said M Narendra, chairman and managing director, Indian Overseas Bank. “Also, both banks and companies are becoming extra-cautious due to overall slowdown.”
According to latest data released by RBI, credit disbursal increased by Rs 8,500 crore for the fortnight ended on November 18, while outstanding credit stood at Rs 41,80,474 crore.
The deposit growth has also been falling. Year-on-year deposit growth stood at 16.37 per cent as on November 18, as against 17.5 per cent on a fortnight before that — on November 4. Attractive returns on public provident fund and a ploughback of surplus cash by public sector companies have led to the sluggish deposit growth.
A top public-sector bank official said PSUs are putting back their surplus instead of putting the money in current deposits. “This is being done in order to reduce the debt burden of the state governments,” he added.
Banks, too, said they were aiming to cut down on their high cost wholesale deposits in the current low credit growth scenario.
