Growth in non-food bank credit rose to a near five-year high of 14.78 per cent year-on-year during the fortnight ended October 26 from 14.5 per cent in the previous fortnight. The last time non-food credit grew faster was in December 2013, when it clocked 14.9 per cent during the fortnight ended December 13.
According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 89.79 lakh crore on October 26, a tad higher than Rs 89.48 lakh crore on October 12 and Rs 78.08 lakh crore a year ago. Non-food bank credit had recorded a 6.44 per cent y-o-y growth in the year-ago period.
Deposits with the banking system grew 9 per cent y-o-y to Rs 117.71 lakh crore as on October 26. 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 the growth trends in credit offtake. Rajnish Kumar, chairman, State Bank of India (SBI), told reporters after the bank’s Q2FY19 results that it 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.
Analysts agree that much of the growth in fresh loans is being driven by small-ticket retail loans in the absence of fresh investments by corporates. In a recent note, Kotak Institutional Equities said that the medium-term outlook for corporate loan growth remains weak, given the ongoing deleveraging of large corporate borrowers and lack of large-ticket capex. However, some bankers say that corporate growth is looking up, too, even as lenders are cautious on the quality of borrowers. — With inputs from FE