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Journalism of Courage
The wedge between deposit and credit growth of the banking system has widened further with deposits falling by Rs 9,820 crore during the fortnight ended February 22,data from the Reserve Bank of India showed.
During the fortnight,the deposit growth was just 12.73 per cent year-on-year while credit grew at a faster clip of 16 per cent. Outstanding deposits stood at Rs 6,561,051 crore while outstanding non-food advances were Rs 5,019,087 crore.
This being the last quarter of the financial year,most banks are scrounging for deposits in order to meet the credit offtake as well as increase their balance sheet size.
Many banks,including the largest lender State Bank of India,have hiked their deposit rates to attract funds. SBI raised interest rates on deposits by 25 basis points in February for the first time since 2011.
Pratip Chaudhuri,chairman,SBI,had said that the bank is witnessing a sharp pick up in loan disbursements. Chaudhuri has increased the banks credit growth target for 2012-13 to 21 per cent from 18 per cent estimated earlier.
To meet the surge in loan demand,banks would need deposit growth to also pick up and this could lead to some banks increasing their bulk deposits as well.
However,the banking systems liquidity has improved off late due to government spending trickling in. FE
