Bank credit could catch up with deposit growth

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Bank lending appears to be catching up with growth in deposits, according to data from the Reserve Bank of India (RBI).

Advances from all scheduled banks increased by 31,692 crore during the fortnight ended July 30. Deposits during the fortnight of reports increased by ₹ 33,886 crore.

With the increase in advances, the stock of banks’ investments in central and state government securities declined by 13,514 crore, according to the RBI’s “Planned Banks in India Position Statement”.

Also read: Public sector banks report sharp declines in loans to MSMEs in Q1

The advance portfolio of all scheduled banks decreased by 49,490 crore in the previous fortnight ended July 16, 2021. However, deposits increased by 63,398 crore.

Expert advice

Vidya Shankar, Senior Manager (Ratings), and Hemant Sagare, Senior Manager (Ratings), Brickwork Ratings (BWR) observed in a report that government and RBI measures have always been proactive in improving growth. credit to support the business cycle. through the segments.

“As the progress of the industry continues to grow slowly, measures such as vaccination and unlocking of services will surely help revive it, with supportive measures from the regulator for this segment as well. The business community also appears to be better prepared to accept the pandemic and resume business activities in the current pandemic scenario, ”the authors said.

Read also: SFBs reflect on transition to universal banks

Given the quality levels of existing assets, a probable increase is expected in the medium term. However, BWR believes that maintaining healthy capitalization levels will boost banks’ appetite to increase their credit risk.

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