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BUT BANKERS HOPEFUL OF HIGHER LOAN DEMAND IN Q4
AFTER recording a positive growth for five straight fortnights, bank loans have dipped Rs 11,898 crore during the fortnight ended January 15.
Although credit growth will be far below original estimates, bankers are hopeful that the loan demand in the fourth quarter will be better than that of the first three quarters.
Latest figures released by RBI show that outstanding bank loans stood at Rs 30,08,908 crore as on January 15. Both food credit (bank loans to the government for grain procurement) and non-food credit (all other loans) have dipped during the fortnight by Rs 3,825 crore and Rs 8,074 crore, respectively.
On a YoY basis, the loan growth in non-food credit works out to 13.9% compared with 22.1% growth seen in the year-ago period. Many large banks - both public and private - have pruned their loan growth targets for the year. Bank of America-Merrill Lynch economist Indranil Sengupta said his bank expects the year to end with a loan growth of 16%. However, RBI in its mid-term review of the monetary policy has projected a lower revised growth of 18%. But according to Bank of Baroda CMD MD Mallya, there has been a perceptible loan growth since the end of the third quarter and the fourth quarter would see a pick-up in this momentum.
A senior official with a public sector bank, requesting anonymity, explained that the slow pace of loan pick-up through most part of the year was largely due to a subdued demand from oil and fertiliser companies. However, banks had seen a pick-up in demand for project finance. Though many banks had sanctioned huge amounts, corporates had not drawn for a long time and are now seen utilising this limit.
The dip could also be an outcome of window dressing of bank books in the third quarter. Typically, banks push up credit numbers by advancing large short-term loans to bluechips at low rates. This money usually comes back after a few weeks.
Deposits mobilised by banks have also dipped in the fortnight by Rs 21,966.2 crore to Rs 4,242,573 crore as on January 15. While demand deposits dipped Rs 25,334.3 crore, term deposits rose Rs 3,368 crore during the fortnight.
Source : The Economic Times
