Credit appetite in the economy seems to be waning in sync with the growth slowdown.
In the first two fortnights of the second quarter so far, the credit outstanding of banks has come down by Rs 57,878 crore. As on July 27, banks had advances aggregating Rs 47,02,969 crore.
In its first quarter review of monetary policy, the RBI revised the growth projection for 2012-13 downwards from 7.3 per cent to 6.5 per cent as the assumption of a normal monsoon and improvement in industrial activity did not hold.
In the first quarter (April-June period), banks saw credit offtake aggregating Rs 1,49,218 crore mainly on account of demand for working capital. Demand for loans for investment purposes was muted.
Deposits
In the first two fortnights of the second quarter so far, bank deposits increased by Rs 14,787 crore. As on July 27, banks had deposits aggregating Rs 62,43,960 crore.
In the first quarter (April-June period), banks saw deposit inflows aggregating Rs 3,25,515 crore. At a time when the equity markets have turned volatile, investors are squirreling away a portion of their surplus in safe-haven fixed deposits.
Investments
In the face of lacklustre credit growth, banks are investing their surplus liquidity in Central and State government securities.
In the first two fortnights of the second quarter so far, bank investments increased by Rs 35,832 crore. As on July 27, banks had investments in Central and State government securities aggregating Rs 19,12,981 crore.