RBI lowers credit growth projection to 16% in FY13

The Reserve Bank of India (RBI) lowered its growth projection for non-food credit, the money that banks lend to individuals and companies, to 16% from 17% set earlier in 2012-13. Similarly, the central bank reduced its deposit growth projection from 16% to 15% for the financial year.

"Deposit and credit growth have so far trailed below the indicative trajectories (projections) of the Reserve Bank indicated in the April Policy and reiterated in the July review," RBI said in the July-September monetary policy statement, released on Tuesday.

"Deposit growth has decelerated with the moderation in interest rates, especially term deposits. Credit growth has ebbed with the slowdown in investment demand, especially with regard to infrastructure, and lower absorption of credit by industry, in general. Keeping in view the developments during the year so far and the usual year-end pick-up, the trajectories of the monetary aggregates for 2012-13 are projected at 15% for deposit growth and 16% for growth of non-food credit."

For the fortnight ended October 5, 2012; the non-food credit grew at 15.4% year-on-year to around Rs 45 lakh crore. Some data suggests that the year-on-year loan growth contracted in all major sectors barring agriculture. The much touted infrastructure sector too failed to contribute to the overall credit growth.

Moreover, the y-o-y deposit growth slowed to 13.9% to around Rs 62.50 lakh crore. This was due to the overall decrease in term deposit rates. In between April-September, 2012; all scheduled commercial banks on an average reduced term deposit rates by 13 basis points across all maturities. By doing this, lenders basically transmitted RBI's policy actions of repeated CRR cuts.

saikat.das@network18online.com