The
impact of window dressing efforts by banks seems to have waned off.
After posting a string growth for the year end to be within the Reserve Bank of
India's comfort zone, both deposit and loan growth slowed in the
first full fortnight of FY'13.
Aggregate deposits mobilised by the commercial banks in the country amounted to Rs 60.3 lakh crore as on April, 20 as per the latest data released , down Rs 62465 crore over the previous fortnight's levels. This means that the annual or year-on-year growth works out to 11.8% , down from 14.3% as on April 06'12.
Similarly,
loans extended by the commercial banks in the country amounted to Rs 46.2 lakh
crore as on April, 20, down Rs 75,885 crore over the previous fortnight's
levels. This means that the annual or year-on-year growth works out to 15.1% ,
down from 18.7 % as on April 06'12.
Banks often shore up figures during the end of a quarter or financial year through what is called window dressing to show a strong balance sheets. As a result deposit and credit figures tend to surge sharply during fortnights in which a quarter end falls. However in the subsequent fortnights funds go out of the banking system as much of the loans and deposit are mobilisd only for a short period and are hence not perceived to be indicative of any long-term trend.
It may be recalled that during a large part of FY'12, both deposits as well as loan growth was not within the central bank's comfort zone due to low demand from corporates. While deposit growth slowed due to other attractive investment opportunities. Yet, the year end figure showed that the rates were within the central bank's projection. This was largely due to window dressing by banks.
However, going ahead, banks could see some revival in credit demand as the Reserve Bank has reduced its key policy rate - the repo rate by 50 basis points or bps (1bps is 0.01%) to 8%. This has prompted many banks to reduce their lending rates as well.
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