Indicating that the demand for credit is steadily picking up, bank credit rose Rs 13,030 crore during the fortnight ended May 7, 2010.
According to data released by the Reserve Bank of India (RBI), bank credit rose Rs 13,029 crore to Rs 32,27,771 crore till May 7. On year-on-year basis, credit increased 17.25 per cent. During the previous fortnight ended April 23, banks had withdrawn Rs 26,483 crore. Food credit during the period went up by Rs 4,647 crore.
"Agriculture procurement is going up. Similarly, demand from the manufacturing sector is increasing and hence there is an increase in withdrawals from sanctioned credit. We expect the credit pick-up to improve further in the first quarter unlike the situation in non-recessionary times when initial months see a low credit offtake," said a senior executive of Punjab National Bank.
During the fortnight, deposits mobilised by banks went up by Rs 24,471 crore. This was mainly due to time deposit, which grew by Rs 28,871 crore while the demand deposit fell by Rs 4,400 crore during the fortnight. On a year-on-year basis, deposits went up by 14.72 per cent.
The central bank has projected the credit to grow by 20 per cent and deposits by 18 per cent during this financial year.
"It is a sign that credit is beginning to pick up. A lot of old sanctions are now being drawn. Apart from infrastructure, cement, pharma, steel are showing improvement. The diamond sector has also been taking money," said a senior executive of Axis Bank.
