The second half of the month of May saw an increase in the deposits and loans, while during the beginning two weeks of the month the deposits fell by Rs. 2,100 crore and advances grew by Rs. 4,000 crore.
The last two weeks of May saw the banks amassing Rs. 80,000 crore in deposits and a credit flow of Rs. 64,000 crore. The banks' deposits grew by 14.4% on yearly basis; while loan books grew by 18.3%.
The current fiscal projections for deposits and advances are 16% and 17% respectively. The reduction in the lending rates gave a little thrust to the retail credit flows, but the credit demand from the project side remained low.
There was a mixed reaction to the RBI's announcement of policy rate cut last month, while many banks reduced their lending rates, larger banks kept them untouched.
Poor demand and lack of availability of funds were contributing to the slowdown in credit growth, said Ajay Marwaha, Executive V.P and trading head at HDFC Bank. The banks are waiting for the RBI's mid-quarter review slated on 18th June for a rate cut, which might boost the credit flow.