Bank Credit Growth Flattens A Tad In Latest Fortnight But Continues To Be Robust: CareEdge

CareEdge Research Report

Credit offtake rose by 15.5% YoY for the fortnight ended February 24, 2023. In absolute terms, credit offtake expanded by Rs 15.6 lakh crore to Rs 134.5 lakh as of February 24, 2023 from March 2022.

The growth has been driven by personal loans, robust growth in non-banking financial companies, higher working capital requirements due to inflation and an Indian currency depreciation and lower borrowings from overseas markets.

With a larger base, deposit growth witnessed a slower growth at 10.1% YoY compared to credit growth for the fortnight ended February 24, 2023.

Deposit rates have already risen and are expected to go up even further due to elevated policy rates, intense competition between banks for raising deposits to meet strong credit demand, a widening gap between credit and deposit growth, and lower liquidity in the market.

The short-term weighted average call rate has reached 6.72% (as of February 24, 2023) increasing by 104.0% YoY and 86.0% from March 31, 2022, due to a rise in policy rates and lower liquidity in the system.

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