Bank credit rose 6.63% to Rs 107.75 lakh crore and deposits increased 12.06% to Rs 149.34 lakh crore during the fortnight ended February 26, according to data from the Reserve Bank of India (RBI).
During the fortnight ended February 28, 2020, bank lending stood at Rs 101.05 lakh crore and deposits at Rs 133.26 lakh crore, recent data released by the RBI showed.
Bank credit increased 6.58% to Rs 107.04 lakh crore and deposits increased 11.75% to Rs 147.81 lakh crore during the previous fortnight ended February 12, 2021.
Care Ratings, in a report, said bank credit growth in the fortnight ended Feb.26 was stable from the previous fortnight and returned to levels seen in the early months of the pandemic, when growth loans ranged between 6.5 percent and 7.2 percent in April 2020.
According to analysts, the growth of bank credit is driven by an increase in loans to individuals.
Emkay Global Financial Services, in its March 5 report, said it expects overall retail credit growth, which currently stands at 9%, to accelerate further, driven by mortgages (contributing at 51% of retail loans) and back-end support by unsecured (cards / personal loans) and auto loans.
“Current market conditions favor banks with lower funding rates, strong balance sheets, better asset quality and strong captive customers,” said Anand Dama, analyst at Emkay Global, in the report.
Large private banks such as HDFC Bank (despite the suspension of new card acquisition) and ICICI Bank have been at the forefront of the growth momentum in retail, while Kotak Bank is finally showing much needed signs of growth and trying to uplift the retail game, the report had said.
Among state-owned banks, SBI and Bank of Baroda, which have been the major players in the mortgage market, are also shifting gears in auto finance, according to the research report.
Care Ratings believes that the increase in outstanding credit over the next fifteen weeks is expected, as year-end transactions are expected to increase bank lending as banks undertake year-end closing activities . This trend has been observed for three or four years. In the first nine months of the current fiscal year, when credit growth was 3.2 percent, bank deposits grew 8.5 percent.