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Anand Rathi Report
Indian Banks saw large deposit inflows during the week. The larger part was invested, but credit expanded too.
In growth terms, however, credit decelerated, deposits accelerated and excess statutory liquidity ratio (to net demand and time liabilities) hit a high since 2005 (excluding demonetisation).
The Reserve Bank of India’s liquidity infusion and government’s credit guarantee are yet to reflect in bank-credit expansion.
Banks are parking money either in excess statutory liquidity ratios (approximately Rs 16 trillion) or with the RBI under the liquidity adjustment facility (LAF) ( approximately Rs 7 trillion).
While lower economic activity is a major drag on credit growth, banks, too, remain risk averse to lend to lower -rated entities. Now hopes are pinned on loan restructuring to stimulate growth.
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