Growth in deposits continued to lag credit with a 12.1% expansion from a year earlier, show latest data.
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Bank credit totalled ₹220 lakh crore at the end of May, against deposits of ₹265 lakh crore. On a fortnightly basis, deposits grew by ₹3.14 lakh crore, or 1.2%, while credit expanded by ₹3.29 lakh crore, or 1.5%.
ET BureauStill Skewed: The rise was the strongest in nearly two years; deposit growth continues to lag
“The credit market has become a major source of funding for the economy now because yields in the bond market are inching up, so companies have turned to bank loans,” said IDFC First Bank chief economist Gaura Sen Gupta.
“There is some loss of momentum because of the (Iran) war, no doubt. But consumer demand has largely been shielded by the government and oil marketing companies,” Gupta said.
Also read: Reliance Industries-led consortium wins bid for 101-acre Mumbai slum redevelopment projectIn November last year, State Bank of India, the country’s largest lender, had revised its loan growth target to 13-15% from 12-14%, citing a strong credit pipeline and broad-based demand across retail and corporate portfolios.
Credit growth last fiscal year was supported by GST rate cuts, sustained traction in retail lending, particularly auto loans, robust demand from MSMEs, a revival in lending to non-banking financial corporations, and opportunistic corporate borrowers.
Investments by banks grew 5.1% to ₹72 lakh crore from ₹68 lakh crore, according to banks’ statement of position released by the RBI.