Growth of Loans and deposits again slow in July, Economy weak

Bankers said the speed of loan and deposit growth was too slow in the June quarter because usually corporate prefer to borrow in the second half of the fiscal year.
Banks’ credit grew 1.2 % in the first quarter of the fiscal year that started in April, while deposits rose 1.9 %, data released by the RBI showed on 11-july-2012.
Bankers are not sure of achieving RBI’s loan and deposit growth projections with the economy not showing signs of a revival. The country’s economic growth slumped to its lowest level in nine years to 5.3 % in January-March.
“It (RBI’s projections) will be slightly stretched,” said a senior official at a state-run bank, adding that advances are likely to grow at 15 to 16 %, and deposits 14 to 15 %.
The RBI projects credit growth at 17 % in 2012/13 and deposit growth at 16 %.
Banks’ outstanding credit was 47,608.47 billion rupees ($856.27 billion) as of June 29, while deposits at 62,291.73 billion rupees.
“There is not much of a demand. New projects are not coming up, and disbursement is not happening. Also, some window dressing happens at March-end,” a senior official at another state-run bank said.
In the absence of demand for credit, banks continued to park their money in central and state government bonds. Investment in government bonds and other approved securities rose 6.7 % to 18.6 trillion rupees in the three months to June.