Mumbai, March 27 The typical year-end phenomenon of robust credit offtake is once again on full display with banks lending Rs 22,423 crore in the fortnight ended March 13, 2009.
According to the Reserve Bank of India’s statistics, in the last three fortnights alone, banks cumulatively have lent Rs 54,175 crore.
According to bankers, most of the credit recently disbursed by them is short-term in nature. Realising that banks are flush with liquidity, corporates are pressing them to give short-term credit at 8-8.5 per cent. And banks are obliging as they hardly have avenues that will fetch better returns.
In the financial year so far, banks have cumulatively lent Rs 3,28,600 crore as against Rs 3,46,450 crore in the corresponding period last year i.e. banks had lent Rs.17,850 crore more last year.
Pointing out that bank credit is slowing, Dr. Duvvuri Subbarao, RBI Governor, said, “Recent data indicate that the demand for bank credit is slackening despite comfortable liquidity in the system. Dampened demand has dented corporate margins while the uncertainty surrounding the crisis has affected business confidence.”
“The index of industrial production has shown negative growth for two recent months and investment demand is decelerating. All these factors suggest that growth will moderate more than we had earlier thought,” the Governor said at the Confederation of Indian Industry’s National Conference and Annual Session 2009 in New Delhi on Thursday.
In the reporting fortnight ended March 13, 2009, aggregate deposits with the banking system declined by Rs 3,363 crore. In the preceding two fortnights, however, there was a robust accretion of Rs 67,063 crore to the deposits of the banking system.
Thanks to the high interest rates offered by banks till December 2009, in the financial year so far, aggregate deposits surged by Rs 5,35,562 crore as against Rs 4,68,128 crore in the corresponding period last year.
Forex reserves jump
Meanwhile, the foreign exchange reserves soared by $5.102 billion in the week ended March 20, 2009. As on this date, the country’s forex reserves stood at $253.826 billion.
In the reporting week, the reserves rose primarily on account of the foreign currency assets (FCA) going up by $5.081 billion. FCA expressed in US dollar terms includes the effect of appreciation/depreciation of non-US currencies (such as euro, sterling, yen) held in the reserves. India’s reserve position with the International Monetary Fund went up by $21 million. Since end-March 2008, India’s forex reserves have shrunk by $55.897 billion.
Source : Business Line