Business

Credit growth gets festive boost

Banks extend loans worth over ₹1 lakh crore during the last three fortnights

After being lacklustre for several months amid a slowing economy, credit growth is showing some signs of pick- up during the festival season with banks extending loans worth just over ₹1 lakh crore in the last three fortnights.

According to latest data released by the Reserve Bank of India (RBI), bank credit growth was in positive territory on year-to-date basis, after several fortnights. For the fortnight ended October 11, loans grew by ₹21,645 crore, on the top of the ₹59,653 crore in the previous fortnight and ₹20,998 crore the fortnight before that. As a result, credit growth was 0.2% till October 11; the figure was in the negative zone for several fortnights.

Single digit growth

However, on year-on-year basis, credit growth is still in single digit, at 8.8%.

The healthy credit off take in the last three fortnights comes on the back of several steps taken by the government which were implemented by the banks.

The Finance Ministry had asked public sector banks to organise “shamiana meetings” in several districts this month to extend loans to non-banking finance companies and retail borrowers, like home buyers and farmers. Banks have tied up with several non-banking finance companies also for loan co-origination to extend credit facilities to the MSMEs. This has helped banks to leverage to reach last mile customers of NBFCs.

To boost credit flow that could help the economy recover, the RBI has reduced interest rates by 135 bps between February and now, which has allowed banks to lower their lending rates.

So far as deposit growth is concerned, banks have mobilised ₹31,070 crore of deposits during the fortnight ended October 11, RBI data showed. Deposits recorded 9.8% growth on a year-on-year basis and 2.9% in the financial year so far.

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Printable version | Jun 7, 2020 12:40:55 PM | https://www.thehindu.com/business/credit-growth-gets-festive-boost/article29801408.ece

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