According to the Reserve Bank of India, loans increased by 6.64% to Rs 107.15 lakh crore and deposits increased by 12% to Rs 149.44 lakh crore. On 28 February 2020, bank credit amounted to Rs 101.05 lakh crore and Rs 133.26 lakh crore deposits, consistent with recent data released by the RBI. Bank loans increased by 6.58% to Rs 107.04 Lakh Crore and deposits increased by 11.75% to Rs 147.81 Lakh Crore on 12 February 2021.
According to the Care Ratings Survey, bank credit growth at the top of the fortnight of 26 February remained steady compared to the last fortnight and returned to the speed observed within the first months of the pandemic, with loan growth ranging from 6.5% to 7.2% in April 2020. The increase in bank credit is motivated by a rise in retail loans. The general retail credit growth, currently at 9%, is further accelerated, powered by mortgages (contributing 51% of retail loans) and back-end funding by unsecured (cards/personal loans) and vehicle loans.
Current market conditions favor banks with lower funding costs, a healthy record, stronger asset quality and a robust captive customer base. HDFC Bank and ICICI Bank are at the forefront of retail growth, while Kotak Bank, too, is finally showing signs of much-needed growth and trying to spice up the retail game, the report said. Among the state-run banks, SBI and Bank of Baroda, which are the key players within the mortgage industry, also are changing gear within the auto finance field.
Care Ratings is of the opinion that the increase in credit outstanding over the subsequent fortnight is probably going because the year-end transactions are expected to approach bank credit as banks conduct the year-end closing activities. This pattern has been evident for the last three-four years. Within the first nine months of the present financial year, though credit growth was 3.2%, bank deposits were up 8.5%.
