Uncertain economic conditions pull down deposits and advances
By Neelima Shankar
May 31, 2012
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Current fiscal year hasn't been very happy for the banking sector. The Reserve Bank of India (RBI) has reported that the advances and deposits for the period have reduced. Slow economic growth and declining demand for loans are the prime reasons.

The fiscal beginning April saw advances to shrink from Rs. 46, 50,000 crore to Rs. 45,490,000 crore; the deposits for the same period also decreased from Rs. 61, 16,750 crore to Rs. 60, 80,000 crore.

There hasn't been much difference in demands for the working capital loans by companies; but there is a decline in demand for financing projects as the companies are being cautious and are uncertain about economy.

The deposits and advances however grew year-on-year basis at 13.8% and 17.4% respectively. The lack of demand for loans gave banks an opportunity to invest in government securities, with banks taking their investments in sovereign bonds to Rs. 18,25,000 crore.


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