Outstanding credit from all scheduled banks declined by ₹5,034 crore in the fortnight ending November 19, indicating that the festival season credit rally seen in the previous fortnight has run out of steam.
In the previous fortnight, ending November 5, outstanding credit of all scheduled banks increased by ₹1,25,262 crore, according to Reserve Bank of India data on ‘Scheduled Banks’ Statement of Position in India “.
Sluggish loan growth
“Loan growth continues to be slow, with no marked recovery in any specific segment except small and medium enterprises.
“A low interest rate environment persists but spreads remain elevated. With asset quality issues gradually declining, we should see spreads narrow but loan demand issues remain,” said MB Mahesh, Nischint Chawathe, Abhijeet Sakhare, Ashlesh Sonje and Dipanjan Ghosh of Kotak Securities Analysts in a report.
Deposits in the fortnight of reports decreased by ₹2,67,623 crore compared to an increase of ₹3,38,451 crore in the previous fortnight.
Fixed deposit rates
According to the latest RBI data, deposit rates were flat month-over-month at around 5.1%.
“Both private and PSBs have cut their term deposit rates by around 50 basis points (bps) over the past 12 months. The cost of wholesale deposits (as measured by certificate of deposit rates) had a much steeper decline. It was broadly flat in fiscal 2022,” the analysts said.