Facing double whammy due to the economic slowdown and the Covid-driven lockdown, the pace of bank credit growth dropped sharply to 6.1 percent in FY20, from13.3 percent in FY19.
Besides, deposit accretion activity has moderated in FY20 to 7.9 percent from 10 percent in FY19, as per the Reserve Bank of India (RBI) data. While lenders faced the slowdown impact all round the year, the coronavirus came up as an added trouble in the final month of the financial year.
The effect of the latter is likely to sustain and perhaps become more prominent in FY21. Scheduled commercial banks in India dispensed Rs 6 trillion in loans during FY20, much lesser than the Rs 11.46 trillion disbursed in FY19.
The outstanding credit is reported at Rs 103.7 trillion on March 27. Lenders raked in deposits worth Rs 9.97 trillion in FY20, against Rs 11.4 trillion in the previous financial year. Outstanding deposits were reported at Rs 135.71 trillion, shows RBI data.
Referring to the downcast of credit growth, the RBI in its monetary policy report mentioned that both low momentum and unfavourable base effects were responsible.
The seasonal fall in credit growth during Q3FY20 was more visible than the corresponding period last year, while the offtake during Q4FY20 (up to March 13) was subdued in comparison to the corresponding quarters of the previous two financial years.
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