Credit growth accelerates to 11%, still lags deposit growth of 13%

After remaining sub-10 per cent for two consecutive fortnights, bank credit grew 11 per cent to Rs 62,69,007 crore for the fortnight ended 3 October, according to RBI data. In the corresponding fortnight last year, bank credit stood at Rs 56,50,107 crore. In the last fortnight, the credit growth rose 9.7 per cent to Rs 61,46,526 crore. In the reporting period, deposits grew 13.05 per cent to Rs 82,89,310 crore as compared with Rs 73,32,159 crore in the year-ago period.

The demand deposits jumped 15.83 per cent to Rs 7,81,649 crore as of 3 October from Rs 6,74,792 crore in the year-ago period. Time deposits grew 12.77 per cent to Rs 75,07,668 crore in the period as against Rs 66,57,367 crore in the same period last year. Meanwhile, tepid credit pick up has been forcing banks to cut pricing of deposits over the past few months.

The latest to join the deposit rates was the state-run Central Bank of India which reduced its deposits rates on various maturities in the range of 5-175 basis points. SBI had earlier lowered deposit rates thrice in the second quarter, while the third largest state-run lender PNB reduced it last week.

Last month, the country’s largest lender State Bank had also cut the interest rate on medium-term deposits.


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