The fortnight ended on April 23 has seen a decline in deposits as well as advances for banks. The latest data released by RBI shows that the deposits of banks have decreased to Rs 4,506,747 crore, a fall by Rs 23,328 crore. The decline has been experienced in both demand and term deposits. The two have dipped by Rs 20,834 crore and Rs 2,494 crore, respectively, during the fortnight.
The loans have also showed a dip by Rs 26,483 crore during the fortnight to Rs 1,437,363 crore. Food and non food credit have decreased by Rs 170 crore and Rs 26,313 crore, respectively.
The investment in government and other securities has decreased by Rs 17,169 crore to Rs 1,437,363 crore during the fortnight.
Banks say that normally they do not strive to push business immediately at the start of the fiscal as they are more into closing the accounts of the previous fiscal. Banks expect loan demand to rise this fiscal so they would be focusing on raising more deposits to fund loans.
RBI in its annual monetary policy statement has made an indicative loan growth projection at 20% for FY11, way above 16.9% loan growth achieved in FY10.
With lesser lending options as of now, banks are likely to park funds with mutual funds.