Non-food bank credit increases by 15.96% on a weak basis

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Bank non-food credit growth has remained above 15% for three consecutive fortnights, on a weaker basis. Non-food credit outstanding rose marginally by 15.96% y-o-y (y-o-y) in the fortnight ending August 26, according to data released by the Reserve Bank of India (RBI).

Outstanding non-food credit stood at Rs 124.3 trillion during the fortnight against Rs 107.2 trillion in the same period a year ago. Total deposits grew 9.5% year-on-year, lagging the rate of loan growth. Outstanding bank deposits stood at 169.9 trillion rupees at the end of the August 26 fortnight.

Despite higher lending rates, bank credit growth continues to accelerate due to a broad-based recovery in the agricultural, industrial, service and personal sectors, the agency said. Crisil rating in a report.

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While personal loans remain strong, industrial loans are also improving. According to a joint report by the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Association of Indian Banks (IBA), the government’s major infrastructure development plans will have a strong multiplier effect and are likely to stimulate demand. infrastructure financing.

In addition to the hike in repo rates, RBI has already initiated the withdrawal of excess liquidity through open market bond auctions and floating rate reverse repo transactions. This, in addition to higher loan growth relative to deposit growth, has led to further liquidity drain, according to the report.

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