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Banks practically double credit development in FY22

Banks nearly double credit growth in FY22

MUMBAI: The rate of bank credit growth hit 9.6% in FY22, up from 5.6% in FY21, even as deposit development slowed to 8.9% last financial from 11.4% in the year-ago duration. A Rs 1.8-lakh-crore surge in lending in mid-March assisted banks add Rs 10.4 lakh crore to their loan books in FY22. This is nearly double the Rs 5.8-lakh-crore growth signed up in FY21.
According to information released by the Reserve Bank of India (RBI), overall bank credit stood at Rs 118.9 lakh crore as on March 25 – the last reporting Friday for FY22. This was a development of Rs 1.8 lakh crore throughout the fortnight and Rs 10.4 lakh crore during the fiscal year, signing up a year-on-year development of 9.6%.
Bank deposits stood at Rs 164.7 lakh crore – a boost of Rs 1.9 lakh crore throughout the fortnight and Rs 13.5 lakh crore during FY22. The growth in bank deposits during the year was 8.9%.
Credit continues to be driven by retail financing. On the wholesale side, part of the development is because of the shift from money markets to loans as the central bank started withdrawing excess liquidity. Likewise, the surge in commodities like oil has increased the need for working capital.
The healing in credit was driven by the economic sector banks, which accounted for a little over half of the credit growth (50.4%) with public sector banks contributing 44.7%.
An SBI research report stated, “Surprisingly, retail loans have emerged as the primary chauffeur of bank credit recently and now have the largest share (30.5%) in the exceptional credit of all set up industrial banks, displacing commercial loans (28.9%). Within retail, real estate loans have the biggest share.”
According to SBI Group chief economist Soumya Kanti Ghosh, the significance of retail loans has actually increased for both private banks and public sector banks. Due to the fact that of subdued success and deleveraging by corporates, banks moved their focus far from large infrastructure and industrial loans towards retail loans.

Published at Sun, 10 Apr 2022 22:01:13 +0000

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