by the end of September, Bank Credit growth stood at 16.5 percent, meanwhile deposits grew by 9.2% reserve Bank of India ,reserve Bank of India) information.
“Credit growth has accelerated to 18% as of October 21, while deposits continue to grow at 9.5%. But instead of driving deposit growth, banks are backing down on their investments and increasing their debt to deposits ratio. Most of the banks have increased their credit-deposit ratio to more than 80%,” said a TOI report.
It is worth noting that even after the current situation, banks are not scrambling for retail deposits. Indian banks have been uncertain about how long credit growth will last and, therefore, are taking a protected approach by raising interest rates through limited tenor offers.
country’s largest lender State Bank Of India It has seen its credits grow by 20% by the end of September, compared to an expectation of 12% at the beginning of the year.
SBI Chairman Dinesh Khara Said that though bank credit is growing twice as fast as deposits, SBI has a large deposit base.
According to Khara, the busy season was the main factor for this increase. According to a TOI report, the SBI chairperson expects total credit to grow by 14-16 per cent this fiscal. He cited infrastructure, renewable energy, oil marketing companies and services as the main drivers of credit.
“As long as there is visibility of demand for the goods they produce, there will be demand for credit from businesses. Moreover, it is the cost of raw materials that has a major impact on their cost while spending on credit is less than 10% of their total cost. Will be less,” TOI quoted him as saying.
The rise in deposits has been a cause of concern for the lenders. According to Bank of Baroda MD Sanjeev ChadhaWith respect to deposit rates, the outlook is still stable.
“It makes sense to be flexible with rates so that you can combine them with stable rates in the coming months. Till we reach a stable rate, the aim of the revision will be to attract incremental deposits. While it is true that credit growth is strong, we cannot extend this growth indefinitely in future,” Chadha said.
(with inputs from TOI)