Banks report poor credit offtake in second quarter
07 Oct 2010
Banks have reported sluggish loan growth in the second quarter of FY11. Numbers compiled by the Reserve Bank of India show that demand for credit was weak, and deposit accretion was also slack.
Loans to business and individuals have grown by only 5.6 per cent over end-March 2010 numbers against an annual growth target 20 per cent.
There has been a marked slowdown in bank credit in the second quarter after bank loans jumped by 4.9 per cent in the first three months of the current fiscal.
The first quarter growth was partly an aberration because over Rs90,000 crore was advanced by banks in a single fortnight of June 2010 to fund telecom companies in their bids for 3G and wireless broadband spectrum.
Non-food credit rose Rs40,249.36 crore during the fortnight ended 24 September to Rs3,372,059.14 crore, according to the RBI data. But for the second quarter, loans grew Rs24,120 crore compared with Rs64,371 crore between end-March 2010 and 18 June 2010.
An analysis of the fortnightly trend in loans indicates loans dipped sharply for three out of the six fortnights in the quarter. However, there was a sharp pick-up towards the end of Q2.