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Bank credit and deposits shrunk in the fortnight ended May 19, reflecting lower business volumes at the start of the new fiscal year. While deposits declined by Rs 59,623 crore to Rs 183.74 trillion at the end of the fortnight, credit shrunk by Rs 6,181 crore to Rs 138.91 trillion.
However, growth in liabilities and credit offtake remained steady on a year-on-year basis, according to the Reserve Bank of India (RBI) data.
On a YoY basis, bank credit expanded 15.4 per cent till May 19, 2023, up from 12.2 per cent a year ago. The pace of deposit mobilisation improved to 10.9 per cent YoY from 9.3 per cent in the same period of FY23. The gap between pace of credit offtake and deposit mobilisation has been wide, impacting credit-to-deposit ratio.
CARE Ratings said the credit-to-deposit ratio has been generally trending upward since the latter part of FY22. However, the recent movement in the ratio has been flat.
Credit offtake has remained robust even amid the significant rise in interest rates, and global uncertainties related to geo-political, and supply chain issues. The growth has been broad-based across segments.
Personal loans and NBFCs have been key growth drivers, while other manufacturing-oriented segments could also drive growth. Meanwhile, credit growth is expected to be in sync with the country’s economic growth in FY24, CARE added.
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