Credit offtake rose by 20.3 % (y-o-y) in third quarter of FY24

Credit offtake: In third quarter of FY24, India's credit market witnessed a robust surge, with credit offtake expanding by 20.3 per cent year-on-year, translating to a substantial Rs. 23.4 lakh crore increase since December 2022. This surge was largely fueled by a strong demand for personal loans and Non-Banking Financial Companies (NBFCs), particularly in initial months of quarter. On or hand, deposit growth experienced a slower trajectory at 13.5 per cent year-on-year, mainly led by term deposits, albeit with some moderation due to a higher base and sluggish growth in Current Account and Savings Account (CASA) deposits. Overall, deposits expanded by Rs. 23.2 lakh crore from December 2022.

Among Scheduled Commercial Banks (SCBs), term deposits exhibited a remarkable year-on-year growth of 19.0 per cent, outpacing growth in CASA deposits which stood at 6.4 per cent. This shift was attributed to sharper increase in interest rates for term deposits and a consequent reallocation of funds from lower-yielding CASA deposits to term deposits. As a result, Credit Deposit (CD) ratio of SCBs rose by 456 basis points year-on-year, reaching 80.6 per cent by end of December 2023, driven by both mergers and heightened credit growth.

Regionally, central region emerged as frontrunner in credit growth, boasting a notable 22.9 per cent increase, while eastern region reported slowest growth at 18.5 per cent. In terms of deposits, western region led pack with a growth rate of 16.1 per cent, while norastern region witnessed lowest growth at 9.7 per cent

In parallel, outstanding Weighted Average Lending Rate (WALR) on SCBs saw a 29-basis point uptick, reaching 9.81 per cent by December 2023. Similarly, outstanding Weighted Average Term Deposit Rate (WATDR) for SCBs rose by 105 basis points, from 6.78 per cent in December 2022 to 6.83 per cent in December 2023, mainly attributed to repo rate hike of 250 basis points implemented between April 2022 and February 2023.