Banks ended the calendar year with higher credit growth of 9.2% as of December 31 on an annual basis (year-on-year), compared to growth of 6.6% a year ago. The outstanding loans stood at Rs 116.8 lakh crore. Significantly, lending increased by Rs 3.69 lakh crore in the last fortnight of the calendar year ending in December, according to the latest data released by the Reserve Bank of India.
Banks are seeing a recovery in loan demand, mainly across all sectors. But stronger growth is seen in retail and MSME lending, largely driven by government efforts to revive the economy following the disruptions to the economy from the COVID pandemic since March 2020, the data shows. on the sectoral deployment of bank credit.
“Major financials reported loan growth of 3-8% quarter over quarter and year-over-year growth also gained ground,” said a report from ICICI Securities.
Demand for large corporate loans is also expected to increase. An internal survey by the research economist of the country’s largest lender, the State Bank of India, suggests capacity utilization remains robust, with more than two-thirds of respondents suggesting current capacity utilization of more than 70 %, while 36% of respondents, from various sectors such as textiles, petrochemicals, building materials, etc. reported better levels of use.
“We believe that India Inc, after going through a phase of deleveraging over the past few years, is now better positioned and confident to embark on the path of re-leveraging. Indian financiers have also built themselves a significant buffer of liquidity/capital to exploit the emerging opportunity,” said I-Sec.
On the liability side, aggregate deposits increased by 10.3% year-on-year compared to 11.5% a year ago. Outstanding deposits stood at Rs 162.4 lakh crore as of December 31. Even deposits rose sharply by Rs 3.7 lakh crore in the fortnight ending December 31.
Bank credit increased by 9.16% to Rs 116.83 lakh crore and deposits increased by 10.28% to Rs 162.41 lakh crore for the fortnight ended December 31, 2021, according to RBI data. For the fortnight ended January 1, 2021, bank credit stood at Rs 107.02 lakh crore and deposits at Rs 147.26 lakh crore, according to RBI’s Scheduled Banks Position Statement in India as of December 31, 2021, published on Friday.
During the previous fortnight ended December 17, 2021, bank advances had increased by 7.27% and deposits by 9.58%. In FY21, bank credit grew by 5.56% and deposits by 11.4%.