The NPA situation is likely to get worse. The Reserve Bank of India's (RBI’s) Financial Stability Report projects gross non-performing assets (NPAs) could rise to over 10 per cent, or even 11 per cent of all advances in a worst case scenario by March 2018. In March 2017, about 9.6 per cent of gross NPAs were logged. Credit offtake declined to historic lows in March 2017, when credit growth dropped to 0.8 per cent for public sector banks and to 4.4 per cent overall, with foreign banks seeing credit shrink by 8.6 per cent.
Credit growth in the banking system is low: SBI chief
| Kolkata Jul 11, 2017 05:54 PM IST
India's largest lender, State Bank of India's Chairperson Arundhati Bhattacharya on Tuesday said the credit growth in India's banking system is low.
Elaborating on the current economic growth rate and inflation rate, Bhattacharya said: "Credit growth especially in the banking system is low. Nine is the percentage at which the credit should grow. The credit is, however, growing at close to five (per cent).
Today, much of the credit at least for the companies that are doing well comes from the market...if that number is added, the credit growth comes around 7.5 per cent. Even it (the credit growth) is lower than a number it should be."
Mumbai: After plunging to an over six-decade low of 5.08 per cent in fiscal 2017, bank credit inched up to 5.52 per cent in the fortnight to April 14, according to the Reserve Bank data.
For the fortnight to April 14, bank credit stood at Rs Rs 76.31 trillion, up 5.52 per cent from Rs 72.31 trillion in the week to April 15, 2016, thus beginning the new financial year on a promising note.
For the year to March, banks' outstanding credit stood at Rs 78.81 trillion as against Rs 75.01 trillion as of April 1, 2016. It can be noted that the credit growth in FY17 was the lowest since fiscal 1954 when it had inched up by a paltry 1.7 per cent, according to the apex bank data.
The low credit growth in fiscal 2017 was due to high bad debt and almost nil corporate demand. Besides, the companies were tapping funds from corporate bond market. In the first fortnight of the fiscal 2018, banks deposit grew by 11.59 per cent to Rs 105.92 trillion as against Rs 94.92 trillion a year ago, as per the RBI data.
In the previous fiscal year, deposits grew by 11.75 per cent, helped by a large flow of funds into the banking system after the demonetisation of high value notes last November.
Credit growth plunges below FY17 level to 4.3%
FY18 began on a sour note for bank credit growth, which slipped to 4.32% in the fortnight to 28 April, much lower than the 63-year low level of 5.08% in FY17, RBI data show
Mumbai: The new fiscal year began on a sour note for bank credit growth, which slipped to 4.32% in the fortnight to 28 April, much lower than the 63-year low level of 5.08% in fiscal 2017, the latest Reserve Bank of India (RBI) data showed.
In the reporting fortnight, credit grew at an anaemic 4.32% to Rs75.45 trillion as against the Rs72.32 trillion in the same period. For the fiscal ending March 2017, credit growth had plunged to a multi decadal low of 5.08% with an outstanding loans at Rs78.81 trillion as against Rs75.01 trillion on 1 Arpil 2016.
The lowest recorded credit growth was in fiscal 1953-54 when it grew at a pale 1.7%. However, loan growth had marginally risen to 5.52% in the fortnight to 14 April to Rs76.31 trillion.
Even then the cumulative growth for the first month of the new fiscal year is only 5.3%. Low credit growth is due to high bad debt and weak corporate demand, and also due to increasing use of debt from corporate bond markets, where rate of interest is much cheaper than what banks are offering.
In the reporting fortnight, bank deposits growth also slowed to 10.33% to Rs105.09 trillion compared to Rs95.25 trillion in the fortnight ended 29 April 2016. In the previous fortnight, bank deposits had grown by 11.59% to Rs105.91 trillion. Banks have seen a rise in deposits due to large flow of funds into the banking system after the note-ban last November
In the reporting fortnight, credit grew at an anaemic 4.32% to Rs75.45 trillion as against the Rs72.32 trillion in the same period. For the fiscal ending March 2017, credit growth had plunged to a multi decadal low of 5.08% with an outstanding loans at Rs78.81 trillion as against Rs75.01 trillion on 1 Arpil 2016.
The lowest recorded credit growth was in fiscal 1953-54 when it grew at a pale 1.7%. However, loan growth had marginally risen to 5.52% in the fortnight to 14 April to Rs76.31 trillion.
Even then the cumulative growth for the first month of the new fiscal year is only 5.3%. Low credit growth is due to high bad debt and weak corporate demand, and also due to increasing use of debt from corporate bond markets, where rate of interest is much cheaper than what banks are offering.
In the reporting fortnight, bank deposits growth also slowed to 10.33% to Rs105.09 trillion compared to Rs95.25 trillion in the fortnight ended 29 April 2016. In the previous fortnight, bank deposits had grown by 11.59% to Rs105.91 trillion. Banks have seen a rise in deposits due to large flow of funds into the banking system after the note-ban last November
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