Surge in demand for credit
By Joseph Samson
Oct 9, 2009
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Banks registered an overall loan growth of 1,08,885 crore in july-september'09 quarter as against a dip of 7000 crore in the preceding quarter. Almost half of this growth came in the last two weeks of September.

According to the latest RBI figures, total loans including food loans, that is loans to food corporation of India for food grain procurement and non food loans amounted to Rs 28,73,155 crore as on September 26. Food loans amounted to Rs 42,717 crore whereas non food loans were worth 23,30,737 crore. The rise in demand for auto loans led to a record Rs 3400crore disbursal. This was the highest in a month for previous two years.

The chairman and managing director of Canara bank , AC Mahajan said "This goes to show that confidence is returning in the economy. A part of the loans is from the sanctions given last year. The demand is coming from all sectors such as infrastructure and manufacturing."

Mr. Narendra Sharma, executive director, bank of India, said that the second quarter had been better that the first one partly because oil companies had started borrowing from banks. He said that the demand also came from manufacturing and retail sector and this indicated that the third quarter would be better than the second quarter.

However, an economist with a brokerage firm said that confidence had still not returned stating that credit growth was higher at Rs 1,34,857 crore during the corresponding period last year. He added that the current year on year (YoY) growth is 13 percent well below RBI's comfort level of 20% for the year.

There was a slowdown in deposits. The long term deposits rose only Rs 4314 crore in the last fortnight. Incremental growth during the quarter was Rs 1,36, 624 crore as against 1,49,273 crore the preceding quarter.


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