Scheduled banks record highest Q1 credit growth

Credit growth for scheduled commercial banks in the first quarter of FY06 has been the highest in a decade. Credit growth for the period between April 1, 2005 and June 24, 2005 amounted to Rs 60, 958 crore, higher than the growth in the corresponding period in the last ten years.

While credit growth has been much higher this fiscal compared to the last two years, its only marginally above the Rs 59,096 crore, credit growth notched up during the period April 1, 2002 to June 28, 2002.

That's because of the merger of ICICI with ICICI Bank ,the impact of which was felt in the credit figures in the first quarter of FY 2003.

Also, growth during the last quarter has been much above the negative growth in credit during the first quarter of period before 1998 that bankers say that the current credit growth is probably the highest ever.

They point out that prior to the growth of retail finance, especially mortgage finance, credit growth used to be a seasonal affair, with negative growth during the first few months of the fiscal year.

The growth is even more robust if only non-food credit is considered. At Rs 57,275 crore, growth in non-food credit during first quarter of FY 2005 is well above the growth recorded in other years, including in FY 2003, when non-food credit growth went up by Rs 52,066 crore in the first quarter again due to the ICICI-ICICI Bank merger.

At the same time, the rise in deposits during the first quarter of FY 2006 has also been high, as a result of which the incremental credit-deposit ratio was 67.9 per cent, only slightly above the ratio of 65.6 per cent for first quarter of last year.