Synopsis:
- Credit offtake continued to grow at a similar pace sequentially, increasing by 19.7% year on year (y-o-y) to reach Rs. 148.8 lakh crore for the fortnight ended Aug 11, 2023. This surge continues to be primarily driven by the impact of HDFC’s merger with HDFC Bank, as well as growth in personal loans and NBFCs. Meanwhile, if merger impact is excluded, credit grew at a lower rate of 14.8% y-o-y fortnight compared to last year.
- Deposits too witnessed healthy growth, increasing by 13.5% y-o-y for the fortnight (including the merger impact). The growth in deposits has not been at the same pace as credit since the larger proportion of liabilities of HDFC was by way of borrowings rather than just deposits.
- The outlook for bank credit offtake remains positive, with a projected growth of 13-13.5% for FY24, excluding the merger’s impact.
- Deposit growth is expected to improve in FY24 as banks look to shore up their liability franchise and ensure that deposit growth does not constrain the credit offtake.
- The Short-term Weighted Average Call Rate (WACR) stood at 6.68% as of August 18, 2023, compared to 5.09% on August 19, 2022, due to pressure on short-term rates basis recent incremental cash reserve ratio (I-CRR) norms by RBI.
