The Hindu Business Line : ‘Busy season’ off to dull start on credit disbursal

Despite being the beginning of the ‘busy season’, the Reserve Bank of India’s latest statement of position of commercial banks shows that outstanding bank credit in the fortnight ended October 23 was down by Rs 21,750 crore to Rs 28,68,566 crore.

In the preceding fortnight, bank credit was up by Rs 17,160.58 crore.

Ample liquidity

Pointing to the surfeit of liquidity of over Rs 1 lakh crore parked by banks collectively with the RBI, a senior banker said that since credit appetite from India Inc was low, banks had no choice but to deploy funds with RBI.

Banks had pushed credit in September ahead of the half-yearly closing. Now, with the beginning of the new quarter, growth has again slacked, said bankers. Even though most of the banks have sanctioned huge amount of funds, availing of loans has not been very good. In the second quarter review of the monetary policy review, RBI had revised its non-food credit growth projection downward to 18 per cent from 20 per cent, pointing out the sluggish bank credit growth.

Investment by banks (mostly in government securities) also fell by Rs 24,703 crore in the reporting fortnight. In the fortnight ended October 9, investments by banks had increased by Rs 4,888 crore. Total investments by banks stood at Rs 13,53,207 crore as on October 23.

Deposits collected by banks also came down by Rs 8,408 crore in the fortnight to Rs 41,52,946 crore, as banks shed high cost deposits. In the previous fortnight, deposits garnered by banks had increased by Rs 41,348 crore.