In one of the clearest indications that economic slowdown is setting in, bank credit has come down sharply by Rs 71,771 crore in the fortnight ended July 15. Deposits with banks too have decreased by Rs 71,438 crore in the reporting period. According to the Scheduled Banks' Statement of Position released by the Reserve Bank of India today, outstanding credit has dipped to Rs 40,14,556 crore as on July 15 this year, against Rs 40,86,326 crore as on July 1. Outstanding bank deposits have gone down to Rs 54,17,244 crore as on July 15, against Rs 54,88,682 crore as on July 1.
Pointing out that there was an element of correlation between credit and deposit growth, a senior public sector banker said if credit off-take is sluggish, then deposit (demand) accretion too suffers.
Due to high lending rates and issues pertaining to statutory clearances and lack of backward linkages, banks are seeing a slowdown in loan sanctions, especially in the infrastructure sector.
Demand deposits in the reporting fortnight came down by Rs 58,074 crore and time deposits by Rs 13,363 crore, according to the RBI.