Bank lending to private corporates surges 14.9% in September: RBI data

Bank lending to the private corporate sector witnessed a robust growth of 14.9 per cent in September 2023, up from 14.7 per cent in the same period a year ago, according to data released by the Reserve Bank of India (RBI) on Friday.

In another set of banking statistics disclosed by the central bank, it was highlighted that the share of term deposits offering an interest rate of 6 to 8 per cent increased to 78.6 per cent in September 2023, a significant rise from 12.5 per cent in March 2022.

As per the data on outstanding credit of banks at the end of September 2023, loans to the industry constituted nearly one-fourth of the total bank credit, marking an 8.6 per cent year-on-year increase (compared to 12.3 per cent a year ago). Notably, the growth in working capital loans has remained in double digits for the past six quarters.

The RBI reported, "Bank lending to the private corporate sector recorded robust growth and accelerated to 14.9 per cent (year-on-year) in September 2023 from 11.5 per cent a quarter ago and 14.7 per cent a year ago."

Additionally, the data revealed that the share of personal loans in total bank credit has steadily risen to over 30 per cent, up from 22 per cent five years ago. Furthermore, the proportion of female borrowers in both total bank credit and loans to individuals has shown an upward trend in recent periods.

The Private sector banks continued to demonstrate faster credit growth compared to their public sector counterparts.

Regarding deposits with banks at the end of September 2023, the data indicated that rising interest rates led to an increased preference for deposits with higher yields. The RBI noted, "The share of term deposits bearing less than 6 per cent interest rate came down from 85.7 per cent in March 2022 to 38.7 per cent in March 2023 and 16.7 per cent in September 2023."

Higher returns contributed to term deposit mobilisation, surpassing the accretion to current and savings deposits. Term deposits accounted for over 89 per cent of the incremental deposits during Q2 2022-23.

On an incremental basis, 71.3 per cent of term deposits accrued under the original maturity period of '1 year to less than 3 years' during the latest quarter. Private-sector banks continued to outpace public-sector banks in deposit mobilisation.

Furthermore, nearly 44 per cent of term deposits in September 2023 were of the size Rs 1 crore and above, representing over half of the incremental term deposits during the first half of 2023-24.

(With PTI inputs)