The Hindu Business Line : Bank credit up by Rs 10,204 cr

BANK credit has jumped by Rs 10,204 crore for the fortnight ended December 26, 2003 to a cumulative figure of Rs 7,80,572 crore. This is the biggest jump for a fortnight in recent times with the average increase having been as low as Rs 3,000-3,500 crore.

The increase has been mostly on the non-food credit segment with a vault of Rs 9,359 crore to Rs 7,44,220 crore, while the food credit figure increased by Rs 845 crore to Rs 36,352 crore.

While a part of the increase in credit numbers is said to be a result of the window dressing exercise undertaken by some banks to meet the second quarter result targets, there are also other reasons.

Some banks are known to speed up loan proposals and disperse short-term loans in an effort to meet the bank's second quarter target numbers. Another reason was the advance tax payment on December 15, 2003 due to which many corporates typically draw on their cash credit limit in order to make the bulk tax payment, explained bankers.

Alongside there is also said to be good retail credit off take and fund disbursement even in varied corporate sectors such as chemicals, fertilisers, drugs and pharmaceuticals, real estate for commercial purposes and so on. Typically, October-March is seen as the peak months for credit off take.

The recent announcements by the Finance Minister on several import duty and excise cuts are expected to have a positive impact on bank credit figures. These liberalisations and duty reductions will augment the feel good factor in the economy and also lead to higher spending by individuals. Increasing consumption by consumers will fuel demand across industry sectors and encourage companies to expand capacities, said Mr P. Asokkumar, President, Credit, UTI Bank.

Meanwhile, loans and advances to various state governments by the Reserve Bank of India decreased by Rs 910 crore to Rs 6,560 crore during the fortnight.

Accommodation provided by scheduled commercial banks to commercial sector in the form of bank credit and investments in shares/debentures/bonds/commercial paper, etc., increased to Rs 8,34,058 crore from Rs 8,25,310 crore in the previous fortnight. The year-on-year money supply was at 12.8 per cent.

More Stories on : Credit Market | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Remittances up to $25,000 abroad allowed

Forex reserves jump by $1.5 b

Bank credit up by Rs 10,204 cr