In the first six months of the current fiscal year, the credit growth rate of banks has dropped to one digit

Mumbai, Ta. October 12, 2019, Saturday

In the first six months of the current fiscal year, the country's credit growth rate is slower than deposit growth, indicating that banks under the pressure of the NPA are avoiding lending risk. According to a report by the Reserve Bank of India, the credit growth of scheduled banks during April-September of the current financial year was slowing to 8.2 per cent annually. In the first six months of the last financial year, the bank's credit growth rate was 8.5 percent.

Deposit growth was higher compared to credit growth. For the six months ended September, the growth rate of deposits stood at 8.5 per cent annually. This is an increase of 5.5 percent in the corresponding period of the previous year, the Reserve Bank's report said.

Despite the high interest rate in the first six months of fiscal year 1, lending increased by Rs 5,3 crore, which was only a rise of Rs 1 crore in the first six months of the current fiscal year. Thus, it can be said that banks are avoiding the particular risk of financing lending, especially to non-banking finance companies.

With the increase in credit deposits, banks are also holding on to their surplus money in the securities of the central and state governments. Which is becoming a safe investment. Banks' investment in government securities increased by 8.9 per cent year-on-year till September of the current financial year, which increased by 8.5 per cent in the corresponding period of the previous financial year.

Banks' credit to the MSME sector was almost constant during the fiscal year 1 to 9, but with the spread of NBFCs during this period, MSME sector companies were able to meet their financial needs from NBFCs, an analyst said.

Since October 1, the Reserve Bank is hoping to raise the rate of growth in bank lending, making it mandatory for public sector banks to combine their credit with any one of the four external benchmark rates.