Tag: bank credit

Bank credit may catch up to deposit growth

Banking & Finance

[ad_1]

Read More/Less


Bank credit seems to be catching up to deposit growth, going by the Reserve Bank of India’s data.

The advances of all scheduled banks increased by ₹31,692 crore in the fortnight ended July 30. Deposits during the reporting fortnight were up ₹33,886 crore.

With the increase in advances, banks’ outstanding investment in central and state government securities came down by ₹13,514 crore, as per RBI’s “Scheduled Banks’ Statement of Position in India”.

The advances portfolio of all scheduled banks declined by ₹49,490 crore in the previous fortnight ended July 16, 2021. However, deposits swelled by ₹63,398 crore.

Vidya Shankar, Principal Director (Ratings), and Hemant Sagare, Senior Manager (Ratings), Brickwork Ratings (BWR), observed in a report that the measures of the Government and RBI have always been proactive in enhancing credit growth to support the business cycle across segments.

“While advances to the industry continue to grow slowly, measures including vaccination and the unlocking of services will surely assist in its revival, with supportive measures from the regulator for this segment as well.

“The business community also seems to be better prepared to accept the pandemic and resume their business activities under the ongoing pandemic scenario,” the authors said.

Considering the existing asset quality levels, a likely increase is expected over the medium term. However, BWR is of the view that maintaining healthy capitalisation levels shall assist the appetite of banks for enhancing their credit risk.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Bank credit grows 6.11% in fortnight ended July 30: RBI data

Banking & Finance

[ad_1]

Read More/Less


Bank credit grew by 6.11 per cent to ₹109.1 lakh crore and deposits by 9.8 per cent to ₹155.49 lakh crore in the fortnight ended July 30, according to RBI data.

Bank advances stood at ₹102.82 lakh crore and deposits at ₹141.61 lakh crore in the fortnight ended July 31, 2020, according to RBI’s Scheduled Banks’ Statement of Position in India as on July 30, 2021 that was released on Thursday.

In the previous fortnight ended July 16, 2021, bank credit increased by 6.45 per cent and deposits by 10.65 per cent.

In 2020-21, bank credit increased by 5.56 per cent and deposits by 11.4 per cent.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , ,

Bank credit grows 5.33%; deposits rise 10.94%

Banking & Finance

[ad_1]

Read More/Less


Bank credit grew by 5.33 per cent to Rs 108.89 lakh crore, and deposits rose 10.94 per cent to Rs 152.15 lakh crore in the fortnight ended April 9, 2021.

In the fortnight ended April 10, 2020, bank advances stood at Rs 103.38 lakh crore and deposits were Rs 137.15 lakh crore.

In 2020-21 fiscal, bank credit increased 5.56 per cent and deposits 11.4 per cent.

Care Ratings in a recent report said the bank credit growth rate continues to decline, however, in absolute terms bank credit (in the fortnight ended April 9, 2021) increased by Rs 5.5 lakh crore as compared to the fortnight ended April 10, 2020, but declined by Rs 0.62 lakh crore from the previous fortnight ended March 26, 2021.

“In absolute terms, bank credit usually declines in the first month of the new financial year, as it is a lean period (this trend can be observed for the last five years),” the rating agency said.

However, the year-on-year growth rate has fallen in the first month of the new financial year (i.e., April 2021) for the first time in five years, reflecting subdued credit demand amid the rising second wave of the pandemic, the report said.

The agency said bank credit growth is likely to increase in FY22, given the growth in the economy and the base effect coming into play.

The downside risks include lockdowns in key states, which may impact the industrial as well as the service segments.

Another risk is the end of the Emergency Credit Line Guarantee Scheme (ECLGS) in June 2021, which had propped up the MSME credit.

However, the extension of the Targeted Long Term Repo Operations (TLTROs) and on-lending norms could support growth, the agency said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Bank lending 50 per cent higher in October-February, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Bank credit growth is accelerating with unlock trade gathering momentum as aggregate loans disbursed in the five months to February this year rose nearly 50 percent.

An analysis of RBI‘s credit data shows that banks lent Rs 5 lakh crore between end September and February of the current fiscal compared to Rs 3.3 lakh crore in the same period of FY’20.As of February 26, overall credit growth was higher at 6.6 per cent than 6.1 per cent a year ago. But loan growth in Septmber’20 was lower at 5.1 per cent compared to 8.8 per cent in the same period a year ago, indicating that the unlock phase has spurred credit demand.

Much of the growth in the post pandemic period has been due to various government initiative undertaken as a part of the stimulus package to help the MSME sector to revive the economy post COVID-19. ” ECLGS disbursements at Rs 1.6 lakh crore in the first nine months of this fiscal have lent support” Ratings firm Crisil said in a report.

Besides, the better monsoons this year also lifted prospects for agriculture even as the pandemic derailed the industry and services sector. This also reflected in growth of agri-loans have also risen at a higher pace this year at 9.9 per cent in January, compared to 6.5 per cent with fresh sanctions in absolute terms crossing the Rs one lakh crore mark so far this fiscal.

But the trends till January also show that since the pandemic, some new heads like loan against gold jewellery-132 per cent, bank lending to non-HFC NBFCs-150 per cent, social infrastructure-98 per cent and aviation-120 per cent has gone up by over 100 per cent-

As for loan against gold jewellery this can largely be attributed to focus of banks towards secured lending products post LTV relaxation, said a report by ICICI Securities. “NBFCs, after having consolidated for almost 2 years now, significantly deleveraging the balance sheet by running down high risk profile assets, are now more confident to pursue growth opportunities in a risk-calibrated manner” it said.

Besides lending opportunities arising out of general economic revival and pick up in consumption demand, banks will also have an edge over NBFCs because of their access to low cost funds. “Competition is intensifying. With low-cost funding access, banks will be aggressive in the retail segments, especially housing and new vehicle finance” Crisil said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Bank credit grows by 6.63 per cent

Banking & Finance

[ad_1]

Read More/Less


Bank credit rose by 6.63 per cent to Rs 107.75 lakh crore and deposits grew by 12.06 per cent to Rs 149.34 lakh crore in the fortnight ended February 26, according to a report.

In the fortnight ended February 28, 2020, bank credit stood at Rs 101.05 lakh crore and deposits at Rs 133.26 lakh crore, the recent data released by the Reserve Bank of India (RBI) showed.

Bank credit increased by 6.58 per cent to Rs 107.04 lakh crore and deposits rose by 11.75 per cent to Rs 147.81 lakh crore in the previous fortnight ended February 12, 2021.

Care Ratings in a report said the bank credit growth in the fortnight ended February 26 stood stable compared to the last fortnight and returned to the levels observed in the early months of the pandemic, when the loan growth ranged between 6.5 per cent to 7.2 per cent during April 2020.

According to analysts, the growth in bank credit is driven by an increase in retail loans.

Emkay Global Financial Services in its March 5 report said it expects overall retail credit growth, which is currently at 9 per cent, to accelerate further, led by mortgages (contributing 51 per cent of retail loans) and back-end support by unsecured (cards/ personal loans) and vehicle loans.

“The current market conditions favour banks armed with lower funding rates, strong balance sheet, better asset quality and strong captive customer base,” Anand Dama, an analyst at Emkay Global, had said in the report. Large private banks such as HDFC Bank (despite suspension in new card acquisition) and ICICI Bank have been at the forefront of retail growth momentum, while Kotak Bank too is finally showing signs of much-needed growth and trying to raise the retail game, the report had said.

Among state-run banks, SBI and Bank of Baroda, which have been the key players in the mortgage market, are changing gears in the auto finance space as well, the research report said.

Care Ratings believe that the increase in the credit outstanding during the next fortnight is anticipated as year-end transactions are expected to push up bank credit as banks undertake the year-end closing activities. This trend can be witnessed for the last three-four years. In the first nine months of the current fiscal, while the growth in credit was 3.2 per cent, bank deposits saw a rise of 8.5 per cent.

“While bank credit growth had contracted 0.8 per cent in the first half of this fiscal, it recovered sharply in the third quarter by growing around 3 per cent sequentially. In the fourth quarter, too, it should clock near 3 per cent sequential growth,” Crisil Ratings Senior Director Krishnan Sitaraman had said in a report released earlier this month.

The rating agency expects bank credit to rise 4-5 per cent in the current fiscal despite the sharpest contraction the Indian economy has seen since independence.

In the financial year 2021-22, bank credit is seen growing 400-500 basis points (bps) higher at 9-10 per cent, as the country’s economy recovers, supported by budgetary stimulants and measures announced by the Reserve Bank of India (RBI), the Crisil report had said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Bank lending activity now stronger than last year; credit growth at 6.6% in February

Banking & Finance

[ad_1]

Read More/Less


The credit growth of banks ranged between 6.5% to 7.2% in April 2020.

Banks gave out credit at a faster rate during the fortnight ending February 12, as compared to the same period last year, helped by an increase in retail loans. The bank credit growth was recorded at 6.6%, marginally higher from the 6.4% recorded last year, a report by CARE Ratings showed. With this, the credit growth is back in the range that was last seen during the early months of the pandemic. The credit growth of banks ranged between 6.5% to 7.2% in April 2020.

Bank credit growth strong

Bank credit during the fortnight ended February 12 stood at Rs 107 lakh crore, up from Rs 105 lakh crore at the end of December 2021 but at par with the previous fortnight ending January 29. “The retail, agriculture and allied segment have driven overall credit growth in January 2021 growing by 6.7% and 9.5% respectively,” the report showed. The retail segment accounted for 29% of the total credit, against the 28.1% share recorded in the year-ago period. Industrial segment, however, had the largest piece of the pie accounting for 29.6% of the total credit. The services sector accounted for 28% of the total.

“Trade and tourism, hotels and restaurant segment registered a (credit) growth of 15.7% and 8.9% respectively,” the report said. The professional services segment registered a de-growth of 25%, computer software segment too registered de-growth, making them the only two segment to slip.

Mutual fund redemptions aid deposit growth

Deposits with banks have also increased during the period under review. “Deposit growth increased during the fortnight ended February 12, 2021, compared with 11.1% growth registered during the fortnight ended January 29, 2021, and also as compared with the previous year,” CARE Ratings said. The report further added that the outflows in debt mutual fund and equity mutual fund could support the rise in bank deposits. Of these deposits, time deposits grew at 89% while demand deposits account for the remaining 11%.

With deposit growth outpacing credit growth in the banking system, liquidity remained in a surplus position. “The outstanding liquidity in the banking system as of February 26 aggregated Rs 6 lakh crore, higher than a month ago level of Rs 5.76 lakh crore,” the report said.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , ,

Bank credit grows 3.2% in first nine months of FY21, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Bank credit grew 3.2% to Rs 107.05 lakh crore in the first nine months of the current financial year, against a growth of 2.7 per cent registered in the corresponding period of 2019-20.

In the fortnight ended March 27, 2020, bank advances stood at Rs 103.72 lakh crore.

Bank deposits rose 8.5% to Rs 147.27 lakh crore in the April-December 2020 period as against an increase of 5.1% a year ago, according to the recent data released by the Reserve Bank of India.

The sharp accretion in deposits during the year was due to the safe haven appeal of banks.

In the fortnight ended January 1, 2021, the year-on-year growth in bank credit was 6.7% and 11.5% in deposits, the data showed.

CARE Ratings in its recent report had said the bank credit growth has returned to the levels observed in early months of the pandemic — average bank credit growth in March and April 2020 was around 6.5%.

The bank credit growth in the fortnight ended January 1, 2021, increased compared to last fortnight (December 18, 2020) which can be ascribed to an increase in retail loans.

However, the credit growth remained marginally lower compared with the year-ago period (7.5% as of January 3, 2020) reflecting subdued demand and risk aversion in the banking system.

Lenders are being selective with their credit portfolios due to asset quality concerns, the rating agency said.

According to the recent Financial Stability Report, under a baseline stress scenario, gross non-performing assets of all banks may rise to 13.5% by September 2021, which would be the highest in over 22 years, from 7.5% in September 2020.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Credit growth lags as banks chase recoveries, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


In the quarter-ended September 2020, the GNPA ratio of scheduled commercial banks improved to 7.7% against 9.3% in the year-ago period. India’s banking sector did see a decrease in its gross non-performing assets (GNPA) owing to the moratorium offered by the Reserve Bank of India (RBI) and due to recoveries and higher write-offs by the multiple banks.

State Bank of India has recoveries worth of Rs 4,038 crore and written off loans to the tune of Rs 5,617 crore. Likewise, ICICI Bank has recovered Rs 1,945 crore, written-off Rs2,469 crore.

Bank Recoveries
SBI Rs 4,038 cr
Bank of India Rs 1,172 cr
Bank of Baroda Rs 1,642 cr
ICICI Bank Rs 1,945 cr
Yes Bank Rs 1,000 cr
Bank Write-off
SBI Rs 5,617 cr
PNB Rs 4,555 cr
BoB Rs 2,553 cr
ICICI Bank Rs 2,469 cr
Axis Bank Rs 1,812 cr

On an overall basis public sector banks accounting for 75% share of GNPAs of SCBs (scheduled commercial banks) experienced a drop in the GNPA ratio to 9.3% in the Q2FY21 against 11.6% in Q2FY20 and 9.8% in Q3FY20.

However, CARE Ratings in its latest report stated that the GNPAs would have been around 0.5% to 0.6% higher had moratorium accounts been classified as NPAs.

Even RBI in it’s Financial Stability Report for July 2020 had warned that the asset quality of the financial system could deteriorate sharply, caused by the lockdown-induced disruptions to both supply- and demand-side factors.

Will lending improve in 2021?
As per the RBI’s weekly bulletin, bank credit deployment has already started to witness a decline. The credit growth decelerated to 5.8% and 5.7% during the last two fortnights, compared to last year’s level of 8.0% and 7.9%, respectively (as of November 22, 2019 and December 06, 2019).

Banks have been very selective with their credit portfolios. Sectoral deployment of bank credit has witnessed a downward trend in some crucial industries and sectors. Growth in bank credit to NBFCs declined mainly because of the base effect and risk aversion in banking system due to the COVID-19 pandemic. As for MSMEs, they did secure loans but at higher rates.

In an interview to ET Now, Suresh Ganapathy of Macquarie said, “Bank credit growth continues to languish, with similar trends observed in the NBFC space. There has been a fall in consumption demand, especially in home loans, auto and service segments; and decline in industry credit, primarily on account of risk aversion on the part of banks to lend to MSMEs.”

CRISIL expects the bank credit growth to plummet to a multi-decadal low of 0-1%. Krishnan Sitaraman, senior director at CRISIL, told ETBFSI, “This crisis is unprecedented and so will its economic fallout be, such as lower capex demand as well as lower discretionary spends, to name some. This slowdown credit offtake is significant across segments in the current fiscal. The corporate loan portfolio, which constitutes almost half of total credit, is expected to be the worst-hit, and de-grow this fiscal.” Hence, if the denominator (credit) doesn’t grow the fresh slippages will add to the NPAs, and the GNPA ratio will increase.

There is an improvement in the economy. GST and GDP numbers have shown some growth. The banks are seeing a rise in the credit applications but they are cautious. B Ramesh Babu, MD & CEO, Karur Vysya Bank told ETBFSI, “No one wants to press an accelerator button right now. Because how is it going to pan out no one knows. The current growth is a short term or long term no one knows. So wait and watch mode is preferable.”

Real picture is still awaited
The liquidity surplus in the banking system has increased in the week ended January 1, 2021 to Rs 6.21 lakh crore from Rs 5.09 lakh crore in the week ago period. As per RBI data, banks have maintained a liquidity surplus for the last 19 months. “This can be attributed to the inflow of bank deposits surpassing the outflow of bank credit. The incremental bank deposits (over March 20) have grown by 6.7% till December 18, 2020 as against the bank credit growth of 1.7%. With bank deposits outweighing bank credit flows, the banking system would continue to see a sizeable liquidity surplus in the current week, too,” said Kavita Chacko, Senior Economist with CARE Ratings.

The various liquidity infusion measures being undertaken by the RBI — OMO purchases and, the LTRO and TLTRO — have also added to the liquidity surplus.

Experts view that the performance of financial sector would remain under pressure on account of lack of credit uptake, risk aversion, lower fee income and covid-related provisioning. With the overhang of stressed assets continuing, banks will continue to focus on improving their collection efficiency and an immediate turnaround in lending activity seems unlikely.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,
1 2