Private sector banks managed a 70 basis points (bps) increase in credit growth in the 12 months to March 26, outshining their public sector and foreign competitors, which saw a decline their growth rates.
However, the gap between the previous year’s credit figures for both public sector banks (PSBs) and foreign lenders has narrowed, according to data released by the Reserve Bank of India (RBI) in its Macroeconomic and Monetary Developments Review for 2009-10.
This indicates that the banking industry as a whole is seeing a revival in demand for loans.
The pace of credit growth for private sector banks increased to 11.7 per cent in the period, compared to 11 per cent a year earlier. From March 27, 2009, to March 26, 2010, private sector banks extended additional loans worth Rs 61,211 crore compared to Rs 52,013 crore in the previous 12 months.
Foreign banks continued to squeeze their loan books but the pace of shrinkage has declined. From March 27, 2009, to March 26, 2010, foreign banks pared their loan assets by 1.5 per cent as against 4 per cent growth in the previous 12 months.
Total outstanding loans of foreign banks fell by Rs 2,496 crore to Rs 166,839 crore in the 12 months.
Public sector banks saw their credit growth slow to 19.5 per cent for 12 months up to January 15, compared to 20.9 per cent a year earlier.
“As the economic recovery is increasingly becoming more broad-based, with industrial output exhibiting particularly strong acceleration in recent months, there is a significant revival in credit demand since end-November 2009 and the incremental credit-deposit ratio has also risen steadily in the second half of 2009-10,” the review said.
A record growth in loan disbursals in the last reporting fortnight of the financial year ended March 31 helped banks sail past the RBI estimate of 16 per cent credit growth for the year.
Banks disbursed an additional Rs 115,548 crore in 15 days up to March 26, almost 25 per cent of the Rs 464,849 crore disbursed in the entire financial year.
