Non-food bank credit maintains its momentum and increases by 13.8% year-on-year

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Non-food credit rose 13.8% year-on-year for the fortnight ending July 1, according to data released by the Reserve Bank of India (RBI), supporting double-digit growth for three consecutive fortnights. Non-food credit recorded growth of more than 10% in each fortnight of the first quarter of the current financial year, with the exception of that which ended on May 20.

Non-food credit outstanding as of July 1 stood at 120.99 trillion rupees, higher than 108.45 trillion rupees in the same fortnight a year ago. Deposit growth, which had moderated in the previous fortnight ending June 17, grew by 9.77 percent year-on-year to 169.6 trillion rupees.

Among recently released loan growth data by selected private banks for the first quarter of FY23, HDFC Bank recorded 21.5% year-on-year growth in advances to Rs 13.95 trillion as of June 30 2022. Federal Bank, IndusInd Bank, CSB Bank and AU Small Finance Bank also reported double-digit loan growth in the quarter.

Major private sector lenders such as ICICI Bank, HDFC Bank and Axis Bank have maintained strong mortgage disbursements, brokerage firm Emkay Global Financial Services said in a report. Armed with a cost advantage and better turnaround time, banks have gained market share in home loans. The State Bank of India and other public sector banks are also trying to bolster property lending, he said. Although overall credit growth remains healthy, led by retail, analysts believe that large private banks will be better placed to take advantage of the momentum thanks to better technology.

On the corporate side, companies are ready to borrow from banks after deleveraging in recent years as the recovery in economic activity and rising investment and consumption could sustain momentum, had said. ICICI Securities said earlier.

Although the first quarter saw robust credit growth, analysts at Kotak Institutional Equities said the growth was not evenly distributed across the segments.

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