According to latest data from the Reserve Bank, banks' credit stood at Rs 40.76 lakh crore as on April 8, as against Rs 33.37 lakh crore in the same period a year-ago.
At the same time, deposits grew by 16.77 per cent to Rs 54.75 lakh crore from Rs 46.88 lakh crore during the period under review.
The data shows that the huge discrepancy in the credit: deposit ratio continues to persist in the new fiscal as well.
The Reserve Bank had in December cautioned against the discrepancy and asked banks to initiate steps to bridge the gap.
In the last fiscal, credit offtake from public and private banks grew by over 21.5 per cent while deposits went up by 15.5 per cent.
The RBI had fixed a target of 20 per cent growth in credit and 17 per cent growth in deposit during 2010-11.
Credit off take was higher last fiscal on account of large borrowings by telecom firms to pay for 3G spectrum licences.
The wide gap between credit growth and deposit growth resulted in a sharp rise in the incremental credit-deposit ratio to 102% by end-December 2010, up from 58 %in the corresponding period of previous year.
Liquidity concerns have also ebbed since the beginning of the financial year, as banks become net lenders to the central bank’s liquidity adjustment facility. Liquidity was in deficit mode during the second half of the current financial year, which saw rates heading north.
“Currently, there are no liquidity pressures. Hence, banks may want to withdraw their special rates on deposits. But banks may not reduce rates, as deposits from retail segment are yet to pick up. So they may want to wait and watch before slashing interest rates on deposits,” said an official from a public sector bank.
Source: http://www.mydigitalfc.com/banking
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