Bank credit offtake rises, but at a slower pace

THE uptake in bank credit has continued for the second consecutive fortnight, albeit at a modest pace.      According to the latest figures released by the Reserve Bank, total loans including food credit — loans to Food Corporation of India for grain procurement — and non-food credit (all other loans) amounted to Rs 28,98,769 crore as on November 20. This is an increase of Rs 7,056 crore over the previous fortnights levels. While food credit dipped Rs 260 crore, nonfood credit rose Rs 7,317 crore.      Though the pace of growth is still low compared to the levels in the corresponding period in FY08, there is a marked improvement from the credit situation in the first quarter. According to R K Bakshi, executive director, Bank of Baroda, ` We are seeing some borrowings in retail, SME segments. Also a few corporates have started borrowings from banks.'      At the current level of credit offtake, the annual year-onyear (y-o-y) growth works out to 10.57%, compare to close to 30% in the year ago period. It is still way below Reserve Bank of India's projected growth rate of 18%. Bankers are, however, hopeful of a pick up during the third and the fourth quarter. With large sanctions in infrastructure and the steel sector, credit should pick up.' Bakshi added.      This fortnight has also seen a strong growth in deposits compared to the previous fortnight, which recorded almost flat growth. Outstanding deposits with banks rose to Rs 41,85,923 crore as on November 20, up Rs18617 crore over the previous fortnight's level. While demand deposits dipped Rs 6,660 crore, term deposits rose Rs 25,277 crore during the fortnight.      Investment in government bonds however dipped by Rs 2744 crore during the fortnight to touch Rs 13,61,198.94 crore as on November 20.