 "bank credit")
Reflecting higher levels of activity in the busy season, commercial bank credit grew by 16.02 per cent year-on-year (Y-o-Y) till January 12, 2024. The credit had grown by 16.5 per cent Y-o-Y in the same period in January 2023.
Sequentially, it grew by 0.09 per cent over the previous fortnight ended December 29, 2023. The outstanding credit stood at Rs 154.04 trillion as of January 12, 2024, according to Reserve Bank of India data. This excludes the effect of the merger of HDFC with HDFC Bank.
Rating agency ICRA has revised upwards its projections for bank credit growth for the current financial year (FY24) to 14.9-15.3 per cent from an earlier estimate of 12.8-13.0 per cent on the back of strong offtake in the retail segment and non-banking finance companies (NBFCs). The incremental credit is expected to be Rs 20.4-20.9 trillion in the current financial year (FY24), surpassing the incremental credit of Rs 18.2 trillion in FY23.
On the resource mobilisation front, banks posted a 12.4 per cent Y-o-Y growth in deposits as of January 12, 2024. This was an improvement over 10.6 per cent Y-o-Y growth shown a year ago. However, deposits shrunk sequentially by 0.5 per cent to Rs 198.64 trillion as of January 12, 2024, RBI data showed. This excludes the impact of the HDFC-HDFC Bank merger.
Deposit growth has been relatively steady since Covid times. However, in recent years, credit growth has significantly outperformed deposit growth. This can be mainly attributed to banks having incremental liquidity during the COVID period and comparatively lower outflows. However, the scenario has changed with rising demand for credit and a decrease in liquidity, according to rating agency CareEdge.
