Rise seen in bank lending and deposits during Diwali fortnight

The rise serves as clear signs of post COVID revival of economic activity in the country.

November 18, 2021

During the fortnight ending November 2021, banks loans rose by US$ 16.06 billion.

The fortnight also saw deposits rise by US$ 45.23 billion.

Term deposits rose by US$ 25.65 billion during the same period.

Consumer durable loans rose by 40 percent in September.

With both loans and deposits increasing by over US$ 13.48 billion (₹ 1 trillion), banks are witnessing a rapid surge in businesses during the Diwali fortnight, both being clear indications of post COVID revival of economic activity in the country. During the fortnight ending November 2021, banks loans rose by US$ 16.06 billion ( ₹ 111.63 trillion), translating to a year-on-year growth rate of 7.14 percent compared to 6.8 percent during the previous fortnight. Consumer durable loans have increased by 40 percent in September compared to 14.9 percent during the corresponding period a year ago, making borrowers reap benefits from the reduced interest rates, according to latest data on sectoral flow of credit offtake. The fortnight also saw deposits rise by US$ 45.23 billion ( ₹ 3.35 trillion), translating into a year-on-year growth rate of 11.4 percent compared to 9.9 percent during the previous fortnight. Term deposits rose by US$ 25.65 billion ( ₹ 1.9 trillion), despite about 50 percent of the deposits being liquid demand deposits (US$ 19.57 billion) which are to be invested in the IPOs.

Bank loans amounted to US$ 1.4 trillion ( ₹ 104.19 trillion), while deposits amounted to US$ 1.9 trillion (₹144.03 trillion), In the fortnight ended November 6, 2020, according to the RBI’s Scheduled Banks’ Statement of Position in India data released on November 17. Bank credit had risen by 6.84 percent and deposits by 9.94 per cent, in the previous fortnight ended October 22, 2021. In FY 2020-21, bank credit had risen by 5.56 per cent and deposits by 11.4 percent.

A rise in retail loan demand during the pandemic period was suggested by credit bureau data. A 49 percent increase year-on-year was witnessed in the lending to medium-sized firms US$ 23.5 billion (₹1.75 trillion) towards the end of September, compared to the corresponding period a year ago. The government’s Emergency Credit Line Guarantee Scheme (ECLGS) MSME sector (under which the government provides 100% Guarantee to banks in respect of eligible credit facility extended by it to its borrowers) is reckoned to cover most of the lending.