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Banks collectively lent about four times more in the reporting fortnight ended November 5, vis-a-vis the preceding fortnight amid the festival season, indicating further improvement in credit appetite in the economy.
Banks lent ₹1,27,742 crore in the reporting fortnight ended November 5, against ₹32,671 crore in the preceding fortnight ended October 22, according to Reserve Bank of India (RBI) data on Scheduled Banks’ Statement of Position in India.
Brickwork Ratings (BWR) in a report, noted that credit growth has begun to pick up as business activity resumes in full swing, with gross bank credit growth improving to 6.80 per cent year-on-year (y-o-y) in October 2021 against 5.80 per cent y-o-y growth in June 2021.
In a speech at State Bank of India’s Banking & Economics Conclave on November 16, RBI Governor Shaktikanta Das observed that: “There are signs that consumption demand triggered by the festive season is making a strong comeback. This would encourage firms to expand capacity and boost employment and investment amidst congenial financial conditions.”
New investments
Further, with stronger balance sheets, the organised corporate sector is well-placed to make new investments in emerging areas.
“As demand recovers, I am sanguine about corporate sector playing a major role in turning the investment cycle that will facilitate absorption of surplus liquidity for productive investment,” the Governor said.
In this background, Das emphasised that it is incumbent upon a competitive and efficient financial system to identify high productive sectors and reallocate resources to harness the growth opportunities.
He opined that banks, in particular, should be investment ready when the investment cycle picks up.
The Governor said: “Improved vaccination and reduced infections have materially reduced extreme health outcomes like hospitalisation and mortality.
“This has boosted consumer confidence. With additional boost coming from the festival fervour and pent-up demand, numerous high-frequency indicators suggest that economic recovery is taking hold.”
Per the data on Scheduled Banks’ Statement of Position in India, deposit accretion was at ₹3,40,496 crore in the reporting fortnight against a de-growth of ₹38,019 crore.
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