Growth rate of aggregate bank deposits marginally moderated to 14.1 per cent in 2013-14 from 14.2 per cent in the previous year. The acceleration is mostly on account of large accretion to non-resident Indian (NRI) deposits. Growth in bank credit increased to 13.9 per cent in 2013-14, as compared to 14.1 per cent in 2012-13. The Reserve Bank of India (RBI) continued with the policy of monetary easing during the first quarter of 2013-14 to support growth in the face of moderation of wholesale price index(WPI) inflation and reduced the repo rate by 25 basis points (bps) to 7.25 per cent in May 2013. Following the exceptional measures taken by RBI in Q2 2013-14, both deposit and lending rates firmed up by September, 2013.
The Economic Survey says that the factors impeding the pace of smooth monetary policy transmission to the credit market include rigidities in repricing for fixed deposits, size of government borrowings, level of non-performing assets (NPAs), high inflation and the significant presence of informal finance.
The survey says that the Indian banking sector, which exhibited considerable resilience in the immediate aftermath of the global financial crisis, has been impacted by the global and domestic economic slowdown over the last two years.
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