Deposits and advances with Indian banks have shrunk so far in the fiscal year that began in April, with sluggish economic growth crimping loan demand, the Reserve Bank of India said on Wednesday.
Banks typically see a sharp fall in
business growth in the first couple of months of a new fiscal year as new projects tend to gather steam in the latter half of the year.
Banks saw a net withdrawal of funds, with deposits falling by Rs 36,750 crore to Rs 60,8,000 crore as of 18 May from 6 April, while advances fell Rs 45,490 crore to Rs 4,65,000, crore the central bank release showed.
“There is a slowdown in new projects, because companies are adopting a wait-and-watch mode. But there is no slowdown in the retail segment and in the demand for working capital loans from companies,” a senior official from a state-run bank said.
In the absence of strong demand for loans, banks invested in government bonds, with such investments rising 0.7 percent to Rs 18,25,000 crore during the period.
On a year-on-year basis, deposits were up 13.8 percent, and advances grew 17.4 percent. (curtsey : first post)
Rupesh Yatesh Dalal
Head Research Department
Head Research Department
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