Bank credit increased by Rs 54,658 crore to Rs 35,30,790 crore, during the fortnight ended November 5, according to Reserve Bank of India's Scheduled Banks' Statement of Position.
In the previous fortnight ended October 22, bank credit was at Rs 34,76,132 crore.
Over the corresponding period last year, the growth in bank credit is 22 per cent, higher than the RBI's projection of 20 per cent for the current fiscal. As on November 6, 2009, bank credit was at Rs 28,93,433 crore.
According to Dr Rupa Rege Nitsure, Chief Economist, Bank of Baroda, this is the beginning of the busy season and early indicators show that growth is picking up. As monsoon has been good , agro-based industries such as food processing and industries that have strong forward linkages with agriculture, are doing well. “When rural incomes are on a rise, consumer durables which target rural markets also do well. Generally, good agriculture means good capex undertaken by industries with linkages in agriculture,” she said.
Besides, now companies have started drawing down on sanctions. This has also helped bank credit to rise, she added.
However, going ahead, the growth in credit may seem muted due to the base effect, Dr Nitsure said. “During the last fiscal, the last quarter saw very high growth. So, the growth in credit may look muted towards the end of the fiscal. That is why RBI's projection of 20 per cent is realistic,'' she added. During the fortnight, investments by banks in Government and other approved securities fell by Rs 15,019 crore to Rs 14,87,012 crore.
Deposit collections fell by Rs 65,027 crore to Rs 48,10,227 crore, as people pulled money out of bank deposits to invest in equity markets that saw a spate of public issues, said bankers.
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