Credit growth down 10%

Credit growth down 10%
The Financial Express, October 23, 2009, Page 13

fe Bureaus, Mumbai

The recovery of Indian economy may be more than expected but the credit offtake situation is heading towards bad to worse with every passsing fornight. The loan growth in the banking industry has dipped to 10.75% for the year ending October 9, 2009, as against 12.62% for year ending 25 September 2009, showed the data released by the Reserve Bank of India (RBI), on Thursday.

However in absolute numbers , the bank loans have shown an uptick by Rs 17,160 crore in the last two weeks, for the fortnight ending 9 October.

At the same time, deposit growth has stayed flat at 19.98% during the year ending 9 October as against 19.79% for the year ending 25 September 2009. While credit demand is subdued, bankers believe the tide will turn. “We are seeing some demand for long term funds and companies are also thinking of raising funds from domestic sources, so we think credit growth is picking up. Retail demand has also started picking up a little, however, nothing spectacular on that front,” said a banker.

The RBI has projected aggregate deposits and adjusted non-food credit of commercial banks to grow by 19% and 20% respectively.