Mumbai: The banking industry has just about managed to meet credit and deposit targets set by the Reserve Bank of India (RBI) in its January policy, shows the latest data released by the central bank.
Credit grew in the banking industry at 16.5%, while deposits grew at 17.1%—barely meeting the target of 16% and 17%, respectively, set by RBI.
The fortnightly Scheduled Banks’ Statement of Position in India, released on Wednesday, showed that credit disbursed in fiscal 2010 stood at Rs33.3 trillion against Rs28.6 trillion a year ago, a growth of 16.5%.
The figures have raised hopes that banks will also be able to meet the credit growth target of 20-22% for fiscal 2011, which they informally set for themselves during a pre-policy meeting with the banking regulator last week.
RBI will announce its annual policy later this month.
The bank had lowered its credit growth target twice in the last fiscal as the global slowdown forced Indian firms to scale back their operations and avoid taking loans. Banks were also reluctant to extend loans to firms fearing default.
However, with the economy recovering and exports picking up, coupled with good consumption numbers from the US economy, Indian companies are on the path to scale up their operations.
Also on Wednesday, domestic rating agency Crisil Ltd said it upgraded more Indian firms in the second half of the fiscal 2010 than it downgraded, and that the trend would continue.
Credit growth in the banking system, which was at least 27.6% in fiscal 2007, declined to 21.6% in fiscal 2008 and to 17.3% in fiscal 2009, before tumbling to a 12-year low of 9.49% in October 2009.
Since then, however, an easy money policy from RBI, coupled with stimulus packages from the government, has gradually pushed up credit growth.
To aid the fledgling recovery, banks have said they will only increase rates after RBI’s annual policy.
Investment by banks in Central and state government as well as other approved securities increased 18.90%.