The growth in non-food bank credit rose to a near five-year high of 15.11 per cent year-on-year (y-o-y) during the fortnight ended November 9 from 14.78 per cent y-o-y in the previous fortnight.
The last time non-food credit grew faster was in November 2013, when it clocked 15.6 per cent y-o-y during the fortnight ended November 13.
The growth comes off a relative weak base; in 2017 banks were lending cautiously as they were grappling with loan losses and demand from companies was muted. Moreover, in 2016, demonetisation had impacted loan growth. Again, borrowings had shifted to the money markets — bond and commercial paper markets —in 2016 and 2017 since interest rates in those markets was lower.
With the rate cycle having tuned, bank funds today are turning out to be slightly cheaper for borrowers.
According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 90.50 lakh crore on November 9, a tad higher than Rs 90.34 lakh crore on October 26 and Rs 78.63 lakh crore a year ago.
Non-food bank credit had recorded a 9.02 per cent y-o-y growth figure in the year-ago period. Deposits with the banking system grew 9.14 per cent y-o-y to Rs 118.25 lakh crore as on November 9.
In recent quarters, growth has been recovering from record lows as the banking system shook off the impact of demonetisation and a bulk of lenders pivoted towards retail lending. Bankers now sound increasingly optimistic about growth trends in credit offtake.
State Bank of India (SBI) chairman Rajnish Kumar told reporters after the bank’s Q2FY19 results that the lender had seen a credit growth of 11.11 per cent during the quarter. “We have returned to double-digit growth on the domestic front. Our credit growth is in line with the guidance for 10-12 per cent credit growth for the financial year 2018-19,” he added. FE