Credit disbursed by the Indian banking system rose sharply in the last fortnight of financial year 2017-18, partly reflecting demand driven by economic turnaround. The spurt in credit, Rs 2.7 trillion, in the last fortnight of FY18 was driven mostly by rise in corporate and industrial credit. Higher withdrawal of working capital and some capital expenditure was also witnessed.
This sharp rise has been seen for a second year in row. Bankers describe this as balance sheet management to meet financial year-end targets. Some credit, especially short-term credit, may get reversed in the first quarter of 2018-19. Thus, the banking system may see a dip in credit for next two-three fortnights.
Deposits also saw elevated growth at Rs 3.3 trillion in the last fortnight ended March 31. Some increase is attributed to upward revision in deposit rates that banks
resorted to in the closing month. Many banks
had jacked up rates for bulk deposits (Rs 10 million and above).
*change over previous fortnight data Source: RBI; Compiled by BS Research Bureau