Synopsis
- Credit offtake rose by 15.4% year on year (y-o-y) to Rs.140.0 lakh crore for the fortnight ending June 02, 2023, driven by personal loans and lending to Non-Banking Financial Companies (NBFCs). Meanwhile, deposits also witnessed a healthy growth at 11.8% y-o-y in the fortnight partly supported by RBI’s withdrawal of Rs.2,000 denominated currency notes. In absolute terms, deposits expanded by Rs.19.7 lakh crore y-o-y while incremental credit expanded by Rs.18.7 lakh crore. Deposits surpassed credit by Rs.1.0 lakh crore for the trailing twelve months over the last year. Additionally, credit offtake is expected to moderate in FY24 compared to FY23, due to moderation in GDP growth, lower working capital requirement on account of an anticipated drop in inflation, and a higher base.
- RBI maintained the repo rate in its last monetary policy (held on June 08, 2023). The short-term Weighted Average Call Rate (WACR) stood at 6.1% as of June 02, 2023, as compared with 4.08% as of June 02, 2022. This increase can be attributed to elevated policy rates and as credit grew faster than deposits which resulted in banks using their excess SLR investments and certificate of deposits to fund credit growth. Although, WACR has reduced from 6.69% as of May 04, 2023, due to a liquidity surplus available in the banking system over the last couple of months.
- The outstanding liquidity stood at Rs.2.37 lakh crore as of June 02, 2023, as compared with Rs.3.40 lakh crore as of May 20, 2022. The liquidity in the banking system has improved compared with a deficit in the second half of FY23.
