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Bank credit offtake up 24%, deposits up over 16%: RBI

According to RBI's latest data, credit offtake stood at Rs38.98 lakh for the one-year period ended 11th February compared to Rs31.43 lakh crore a year ago, while deposits went up to Rs51.87 lakh crore from Rs44.51 lakh crore as on 12 February 2010

Mumbai: Credit offtake from public and private sector banks in the country grew by over 24% for the one-year period ended 11th February, indicating an upswing in the industrial activity, reports PTI quoting data from the Reserve Bank of India (RBI).

According to the apex bank, for the one-year period ended 11th February, credit offtake stood at Rs38.98 lakh crore as against Rs31.43 lakh crore a year ago.

During the period, deposits went up to Rs51.87 lakh crore from Rs44.51 lakh crore as on 12 February 2010, as per RBI's latest data.

This represents a rise of over 16.5% on an annual basis.

RBI, in its annual monetary policy at the beginning of the fiscal, had estimated that credit offtake to grow by 20% this fiscal.

However, in December 2010 the apex bank expressed concerns at the widening ratio between the credit and deposit rates of banks. This has the potential to affect the supply of liquidity in system due to higher lending by the banks vis-à-vis lower deposits.

In its recent third quarterly monetary policy review, the central bank had noted that the deposit growth moderated during 2010.

Several banks raised their deposit rates after the Second Quarter Review of 2010-11, which contributed towards a larger deposit mobilisation in December.

Consequently, deposit growth increased to 16.5% by end-December 2010, close to the indicative projection of 17% for 2010-11.

However, annual non-food credit growth has been above the RBI's indicative projection of 20% since early October 2010, rising to 24% by end-December 2010, it said.

The wide gap between credit growth and deposit growth resulted in a sharp increase in the incremental non-food credit-deposit ratio to 102% by end-December 2010, up from 58% in the corresponding period of previous year, it added.

During the past few months, credit offtake has grown at the rate of 20% on average. Credit offtake has been higher this fiscal on account of large borrowings by telecom firms to pay for third generation (3G) spectrum licences.

The government realised over Rs1 lakh crore from the sale of spectrum for high-speed mobile and broadband wireless services, much higher than the budget estimate of Rs35,000 crore.

Credit rating agencies like Crisil had earlier said the country was likely to see credit offtake growth at the rate of around 20%-22% per cent this fiscal.

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