Credit growth plunges below FY17 level to 4.3%
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Mumbai: The new fiscal year began on a sour note for bank credit growth, which slipped to 4.32% in the fortnight to 28 April, much lower than the 63-year low level of 5.08% in fiscal 2017, the latest Reserve Bank of India (RBI) data showed.
In the reporting fortnight, credit grew at an anaemic 4.32% to Rs75.45 trillion as against the Rs72.32 trillion in the same period. For the fiscal ending March 2017, credit growth had plunged to a multi decadal low of 5.08% with an outstanding loans at Rs78.81 trillion as against Rs75.01 trillion on 1 Arpil 2016.
The lowest recorded credit growth was in fiscal 1953-54 when it grew at a pale 1.7%. However, loan growth had marginally risen to 5.52% in the fortnight to 14 April to Rs76.31 trillion.
Even then the cumulative growth for the first month of the new fiscal year is only 5.3%. Low credit growth is due to high bad debt and weak corporate demand, and also due to increasing use of debt from corporate bond markets, where rate of interest is much cheaper than what banks are offering.
In the reporting fortnight, bank deposits growth also slowed to 10.33% to Rs105.09 trillion compared to Rs95.25 trillion in the fortnight ended 29 April 2016. In the previous fortnight, bank deposits had grown by 11.59% to Rs105.91 trillion. Banks have seen a rise in deposits due to large flow of funds into the banking system after the note-ban last November.