Deposit growth picked up pace, credit offtake moderated in August

The data for both credit and deposit excludes the impact of the merger of HDFC with HDFC Bank in July 2023

Bank credit growth showed some moderation year-on-year (Y-o-Y) while deposit mobilisation gathered pace.

Bank credit rose by 14.9 per cent Y-o-Y till August 25, 2023, compared to 15.5 per cent previously. The outstanding credit was Rs 143.17 trillion, according to Reserve Bank of India (RBI) data.

Banks raised deposits at a higher pace of 12.3 per cent in August 2023 against 9.5 per cent in August 2022. Outstanding deposits stood at Rs 190.85 trillion as of August 25.

Data for both credit and deposits excludes the impact of HDFC and HDFC Bank merger in July 2023.  

Credit offtake this financial year (till August 25) was 4.7 per cent against 4.8 per cent in the same period a year ago. Deposits grew by 5.8 per cent, up from 3.2 per cent in August 2022. 

 

Banks have increased interest rates, especially on term deposits, to mobilise funds for meeting the credit demand.

Earlier this week, State Bank of India (SBI) chairman Dinesh Kumar Khara said the tempo of robust credit growth in the first quarter will continue during the remaining part of FY24. This is on the back of demand from corporates and a strong traction in the country’s retail segment. 

Loan may grow by around 14 per cent Y-o-Y in FY24. There is a clear visibility of demand (for credit) from large corporates when it comes to adding capacity. For retail, the traction is huge, Khara said.

Forex kitty rises $4 bn, but still below $600 bn

The foreign exchange reserves rose by $4.04 billion to $599 billion in the week ended September 1, latest data by the Reserve Bank of India showed. This is due to the rise in foreign currency assets, which increased by $3.4 billion in the previous week.