Banks report fall in biz; loan amount down by Rs 37.407 crore, deposits by Rs 5521 crore

MUMBAI: The window dressing effect on bank balance sheets has started to wear off, with banks showing an across-the-board dip in business. According to the latest RBI release , loans extended by commercial banks in the country dipped Rs 37,407.0 crore during the fortnight ended April 22 to Rs 3,919,000.5 crore. This is the first fortnight which captures all the days in the current fiscal . Total deposits dipped by Rs 5,521.2 crore to Rs 5,319,431.5 crore.

Term deposits went up by Rs 36,240.9 crore while demand deposits dipped by Rs 41,762.1 crore. As a result, investments also dipped Rs 15,217.3 crore. This trend is not very surprising because normally in the period immediately after the year end, banks started returning the funds used for window dressing for shoring up their business figures. As a result, the first fortnight ends up showing a dip in business figures .

Moreover, banks on their part are busy either closing their accounts for the previous year or chalking out plans for the current year. Hence, big-ticket loans or deposit mobilisation are seldom seen during this time of the year, said a public sector banker, requesting anonymity . Traditionally, this period is termed as slack season for credit off-take .

On a year-on-year basis, the deposit growth works out to 18.93% while RBI has projected a 17% growth in deposits for the year. The annual growth in loans works out to 21.9% while the central bank's comfort level for the year is 19% growth in credit for FY12.

The Reserve Bank of India has reduced its loan growth target as it has forecasted a lower GDP growth of 8% for the year on account of its prime concern to curtail high inflation. In addition, it has hiked its key policy rates by 50 basis points - one basis point is 0.01 percentage point. As result, the central bank expects banks to raise their lending rates, which may in turn impact the credit growth.

Source: EconomicTimes