The banking sector has been reeling under the pressure of bad debt and the recent default of Infrastructure lending and Financial Services (IL&FS) has further fuelled liquidity concerns in the economy.
But the data released by the Reserve Bank of India (RBI) shows that credit offtake has grown 14.88 percent to Rs. 91.11 trillion for the fortnight ended November 9. The growth registered by the banks is really encouraging with the fact that RBI has put 11 public sector banks under the prompt corrective action (PCA) framework.
Loan disbursed by the banks during the same period last year stood at Rs 79.3 trillion. The RBI releases the credit amount on the fortnight basis and deposits with scheduled banks jumped by 9.13 percent to Rs 118.25 trillion for the fortnight ended November 9 as against last year where it was Rs 108.35 trillion.
As on November 9, loans, cash credits and overdrafts increased to Rs 88.9 trillion, as compared to Rs 77.2 trillion in the year 2017. Similarly, bank loans from the RBI also witnessed an uptake with Rs 1.06 trillion as of November 9, as against around Rs 247 billion a year ago.
The RBI data also shows that banks took around Rs 1.33 trillion worth of loans from the central bank for the fortnight ended October 26. Moreover, the data for the previous fortnight ended October 26 showed that bank credit had risen by 14.57 percent to Rs 90.37 trillion, whereas deposits jumped by 9.01 percent to Rs 117.71 trillion.
The numbers are really are in stark contrast with the market sentiments which firmly believes of cash crunch due to the IL&FS crisis. Speaking to Business Standard, one of the senior public sector bank executives said that "Retail demand is holding on till now and the working capital demand from corporates is on the rise in the busy season. Plus, space will be available in retail as finance and housing finance companies moderate their pace of loan disbursal."
India's largest lender, State Bank of India also expects an increase of 10 percent in its credit growth by the end of current financial year