However, as in comparison with the year-ago interval, the credit score development remained low, reflecting subdued demand and threat aversion within the banking system — particularly in direction of the company section. The credit score development on a year-to-year foundation labored out to be 7.1 per cent.
The financial institution credit score development throughout the reporting fortnight ending December 18, 2020, is being supported by disbursements below the Emergency Credit Line Guarantee Scheme (ECLGS), which has been prolonged additional until March 31, 2020, as per the CARE report.
“The bank credit growth increased marginally compared to last fortnight which can be ascribed to an increase in retail loans along with a marginal uptick in corporate loans,” the report stated.
Deposit development remained flat at 11.three per cent (as of December 18, 2020) in comparison with the earlier fortnight and elevated on a year-on-year foundation (10.1 per cent as of December 20, 2019), it added.
“Whereas, in value terms, the bank deposits have declined compared with previous fortnight (decreased by around Rs 1 lakh crore). This similar trend has been observed in the last few years wherein deposits (value) declined during the last fortnight of December,” the report stated.
Moreover, as on December 18, 2020, the liquidity surplus within the banking system stood at Rs 4.6 lakh crore. The liquidity surplus may be ascribed to deposit development outpacing credit score development persistently, CARE Ratings stated.
The report additional stated the credit score to deposit (CD) ratio elevated marginally over the previous fortnight however remained low towards March 2020 and final 12 months’s degree, owing to slower development in credit score.