The credit pick-up scenario may be getting better for banks in the ‘busy season', going by the latest Reserve Bank of India data.

In the latest fortnight ended December 2, banks disbursed loans aggregating Rs 46,377 crore, against Rs 8,570 crore in the preceding fortnight.

Bankers lay much store by the busy season for credit pick-up as economic activity gains momentum on the back of festivals, harvest of kharif (monsoon) crop and companies planning fresh investments.

The robust pick-up in credit could be attributed to demand emerging from infrastructure, especially roads and ports, manufacturing (working capital loans), and agriculture sectors.

Loan proposals

“In the last couple of months, we have received loans proposals from road and port projects. Though manufacturing companies are not coming with capital expenditure proposals, they are seeking enhancement in working capital limits,” said a senior public sector bank official.

If the credit growth story sustains at the current rate, then the 18 per cent year-on-year projection in non-food credit growth can be achieved, he added. Currently, the year-on-year non-food credit growth is at 17.72 per cent.

The banking system could face a liquidity crunch over the next fortnight due to outflows on account of advance tax payments by India Inc even as demand for credit is gathering pace.

Given this scenario, if the RBI does not reduce the amount of cash that banks are required to park with it (cash reserve ratio), then banks could find themselves in a bind, said a banker.

In the first half of the financial year, credit disbursed by banks was lower at Rs 1,54,496 crore (against Rs 1,81,893 crore in the corresponding period last year) as India Inc faced slowdown in demand and put capex proposals on the backburner in the face of a cooling economy.

In the financial year so far (up to December 2), credit disbursement by banks was lower at Rs 2,96,762 crore, against Rs 3,54,161 crore in the corresponding period last year.

Deposit growth

Thanks to the higher deposit rates being offered, in the financial year so far (up to December 2), banks' have mopped up deposits aggregating Rs 5,05,359 crore, against Rs 3,51,332 crore.

The higher deposit growth and lower credit growth prompted banks to deploy resources in government securities in a big way. They collectively invested Rs 2,42,769 crore in these securities, against Rs 1,01,571 crore in the corresponding period last year.

kram@thehindu.co.in

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