Mumbai: Credit off-take for the fortnight
ended November 6 saw an increase of over 9 per cent -- the
slowest growth in 12 years.
Analysts said the slowdown in credit expansion would
make it difficult for the RBI, concerned as it is over rising
inflation, to hike interest rates.
According to data released by the RBI today, credit
expansion increased by 9.07 per cent at Rs 28,73,062 crore
compared to Rs 26,12,401 crore in the corresponding fortnight
a year ago.
In absolute term, the credit expansion was to the tune of
Rs 2,60,661 crore.
Some analysts said the decline is because of a slowdown
in demand for loans primarily from the corporate sector. With
stock markets recovering, companies in emerging markets like
India have raised funds through equities which has replaced
the need for bank funding.
However, with a pick-up in industrial growth, the credit
off-take should rise in the remaining months of the current
fiscal, they added.
Union Bank of India Chairman and Manging Director M V
Nair said credit growth is low because of the slowdown in the
economy. The demand from the corporate sector is somewhat
subdued. It should pick up in the coming months as the economy
is showing some signs of recovery, he said.
For the month ended September, industrial production
accelerated to 9.1 per cent in September against 6 per cent a
year ago.
All major sectors -- manufacturing, mining and
power generation -- showed higher growth. Even consumer
durables output rose, indicating robust demand for these
products.
According to the RBI data, deposits grew by 18 per cent
in the same period.
The outstanding deposits at the end of November 6 stood
at Rs 43,03,997 crore against Rs 36,22,385 crore in the
corresponding fornight a year ago.
Bureau Report
First Published: Wednesday, November 18, 2009, 23:23