Bankers expect slow & steady pick up in credit
May 29 2014 , Mumbai
There is a marginal improvement in the both credit and deposit growth, though both bank credit and deposit growth has decelerated in the fortnight ended May 16. The year-on-year growth in bank credit has improved from about 13.5 per cent on May 2 to about 17 per cent on May 16.
Rajan Dhawan, executive director, Bank of Baroda, said, “We are expecting a slow but steady improvement in the economy at 5.5 per cent from 4.5 per cent last year, which means that credit growth will also improve. The credit growth would depend on the policy initiatives of the new government.”
Bankers are witnessing green shoots in textile, chemical, pharma and commercial real estate sectors and as the new government starts initiating new policies, bankers are expecting the credit offtake to be more robust by the second quarter.
Arun Kaul, chairman and managing director of the Kolkata-based UCO Bank, said, “There is a slight improvement in credit growth but the major growth is expected to take place towards the second half. We have a large corporate book skewed more towards the infrastructure sector but we are not growing it any more because the bank is focusing more on the retail credit growth.”
South-based lenders like Andhra Bank are witnessing a pick up in credit in chemicals and textiles sectors.
Companies are expected to take a call once the policy on land acquisition and coal linkages are in place and the budget is announced by mid-July. Bank credit registered an year-on-year growth of 17 per cent up to May 16, while the deposit growth for the same period was at 17.8 per cent.
For the fortnight ended May 2, the deposits were growing at the rate of 14.8 per cent year-on-year to Rs 78,88,416 crore, faster than the credit growth, according to the RBI data. Bank credit grew at 13.8 per cent year-on-year to Rs 60,67,459 crore in the reporting fortnight, against Rs 53,29,812 crore last year.