New Delhi: Interest income of the banking industry on an average have gone up by 36% during October-December quarter 2007 despite slowdown in credit off take, following high interest rate regime being unleashed by the Reserve Bank.
The interest income of the sector rose by average 36% in Q3 of current fiscal as compared to the 24% rise in corresponding period of previous financial year, Assocham Eco Pulse (AEP) study said.
This is contrary to slowdown in the year-on-year growth in the non-food credit of scheduled commercial banks (as on 4 January, 2008) to 22.2% in current fiscal against 31.9% in the same period a year ago, it said.
The surge in interest incomes has led the banking sector to record a whopping 40% rise in total income in the quarter as compared to 24% last year, it said.
The analysis was based on the Q3 results of the 13 banks, including 6 private banks and 7 public sector banks.
Private sector banks took the lead in registering a higher growth of 43.5% on top of 56% growth during last year, it said.
The public sector banks lagged behind the private players in income growth by recording a growth of 32.7% rise as against 14% during same period last year.
The interest rates had peaked in the quarter when the prime lending rate touched 13.25% as compared to 11.5% in the corresponding period of previous year.
“Although robust growth in income of the banks will help them in ensuring profitability, RBI must ensure that the buoyancy in the economic activity does not suffer due to restricted credit flow and high borrowing cost,” said Venugopal M Dhoot, president, Assocham.