Indian banks' loan growth gathers pace, may meet RBI projection

MUMBAI Thu Nov 29, 2012 6:21pm IST

MUMBAI Nov 29 (Reuters) - Indian banks have seen a pick-up in demand for credit since the beginning of the festive season in October, and are confident of meeting the central bank's projection for the fiscal year ending in March 2013.

Bank loans have grown 4.3 percent as of Nov. 16 since the beginning of the fiscal year in April, compared with a growth of 1.6 percent in the first six months of 2012/13, RBI data showed. Credit grew 5.9 percent in the same period in the previous year.

"There is some growth visible. Demand for auto loans and home loans increased during the festive season," said a senior official of a state-run bank.

"In the corporate sector, new projects are still slow, but we will be able to meet the RBI's projection," he said.

At its second-quarter review of the monetary policy, the Reserve Bank of India cut its credit and deposit growth projection by 1 percentage points each to 16 percent and 15 percent respectively.

Demand for credit was slow in the first half of the fiscal year as companies held back investments in new projects, and the slow economic growth dampened demand for credit.

Loan growth generally picks up in the second part of the fiscal year, aided by increase in demand for credit from companies which typically borrow more in the second half. Demand for retail loans also sees a spurt in the festive season beginning from October.

As of Nov. 16, banks' credit stood at 48,945.22 billion rupees ($893.2 billion), up from 46,935.66 billion rupees at the beginning of April.

Banks' deposits grew 5.2 percent during the period to 64,100.31 billion rupees, higher than a growth of 3.2 percent in the first six months of the fiscal.

Bankers said credit growth is likely to improve over the next two months.

($1=54.8 rupees) (Reporting by Shamik Paul; Editing by Prateek Chatterjee)

Economic Pulse

REUTERS SHOWCASE

Nifty Above 8,600

Nifty Above 8,600

Nifty hits record high above 8,600; state-run lenders gain  Full Article 

Indian in Iraq

Indian in Iraq

India says no contact with 39 men held by Islamic State in Iraq.  Full Article 

Sahara Issue

Sahara Issue

Sahara looks to raise $650 million loan to fund bail.  Full Article 

Bhopal Tragedy

Bhopal Tragedy

Bhopal's toxic legacy lives on, 30 years after industrial disaster.  Full Article 

Essar Group

Essar Group

Exclusive - Essar's planned oil-for-steel deal tests Iran sanctions  Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

Oil Prices

Oil Prices

Oil hits new four-year low post OPEC as glut looms  Full Article 

Gold Imports

Gold Imports

India eases gold import rule in surprise move.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage