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Demand from firms, NFBCs drive loan growth; however, deposits grow slower In what could be an indication of a pick-up in private investment, loan growth of commercial banks is at a five-year high on the back of strong demand, latest data released by Reserve Bank of India (RBI) showed. According to the data, year-on-year credit growth was 14.6% as on October 26, the highest in five years. In October 2013, credit growth was 16.6%. According to bankers, the credit growth started picking up by the end of August-early September. The month of September alone saw credit offtake of Rs. 2 lakh crore out of Rs. 3 lakh crore worth of loans disbursed during the April-September period. “The credit growth is broad-based. There is loan demand from large corporates, for road projects, and also non-banking finance companies. “The October data corroborates the pick-up in credit growth that started in September,” said Soumya Kanti Ghosh, group chief economic adviser, State Bank of India. Credit to major sectors like infrastructure, textiles, chemical and chemical products and engineering has accelerated. Retail credit is also growing at a healthy pace, particularly housing loans. SBI chairman had also said during an earnings media briefing earlier this week that credit growth had returned for SBI with the bank recording 11.11% year-on-year growth till September. The country’s largest lender expects 10-12% loan growth for the current financial year. Deposit growth, despite picking up was still lagging credit growth with the gap between deposit and credit growth widening. According to RBI data, deposit growth was 9% for the fortnight ended October 26.
Source : https://www.thehindu.com/todays-paper/tp-business/credit-growth-at-5-year-high/article25459166.ece
