InvestorQ : Is it true that the bank credit numbers have been good in the current fiscal year?
Dhwani Mehta made post

Is it true that the bank credit numbers have been good in the current fiscal year?

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Dilmini Mercia answered.
2 months ago
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According to the latest RBI data, overall bank credit for the first nine months of fiscal year 2020-21 i.e. April to December 2020. Bank credit in this period actually grew by 3.2% to Rs.107 trillion in the period. This is substantially better than the 2.7% credit growth achieved in the previous financial year during the same period.

IT was not just credit but even bank deposits rose sharply. For the 9 month period, the bank deposits rose by a whopping 8.5% to Rs.147 trillion in the same period. This resulted in a sharp reduction in the credit deposit ratio of the banking system overall. The sharp spike in deposits was an outcome of the boost to liquidity and risk aversion post-COVID.

ICRA in its report has noted that while credit growth is visible, lenders are being a lot more conservative and selective about credit decisions. Thus credit has grown in the current year but the quality of credit is also expected to have sharply improved. RBI has warned that the gross NPAs could spike from 7.5% to 13.5% by Sep-21 and that has driven credit conservatism among the bankers.

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