Credit offtake up 20%, deposits 18% in 12 months ended Aug

Credit offtake from banks grew by 20.3% to over Rs 41 lakh crore during the one-year period ended August 12, 2011, suggesting an upswing after a brief period of moderation.

According to data from the Reserve Bank, credit offtake during the period stood at Rs 41.73 lakh crore as against Rs 34.67 lakh crore in the same period of the previous year.

The latest rise signals a renewal in investments and industrial activity.

The year-year credit growth has fallen below 19% since mid-July after growing above this level in the past few months. It grew by 18.7% only for the one-year period ended July 29.

Meanwhile, deposits went up to over Rs 56.44 lakh crore till August 12 this year, against Rs 47.83 lakh crore as on
August 13, 2010, clocking a rise of 18%.

In its first quarterly monetary review last month, the RBI had said that credit growth is likely to slow down as a result of the recent rate hikes.

The RBI said credit growth would be around 17-18% this fiscal, as against the earlier projection of 19%, while deposit growth has been pegged at 17%.

During 2010-11, bank credit had increased by 21.5%, while deposits grew by only 15.5%.

India Inc has also complained that frequent rate hikes have resulted in slowing down of investments and industrial growth.

While industrial production recorded a dismal growth of 5.9% and 5.6% in April and May, respectively, it went up by 8.8% in June.

The Reserve Bank has hiked its key-policy rates three times this fiscal, and 11 times since March 2010, to curb inflation.