Indian banks’ loans rose 7.9% in the two weeks to 25 February 25 as compared to a year ago, according to a weekly statistical supplement put out by Reserve Bank of India (RBI).
Deposits during the same period rose 8.6%, the Reserve Bank report showed on Friday. Bank deposits rose ₹89,297 crore to ₹162.17 lakh crore in reporting period.
Outstanding loans rose ₹82,047 crore ($10.74 billion) to ₹116.27 lakh crore in the two weeks to 25 Feb.
Meanwhile, non-food credit increased by ₹91,803 crore to ₹115.59 lakh crore, while food credit fell ₹9,756 crore to ₹68,224 crore.
Recently, Fitch Ratings in a report said strengthening economic recovery and stable financial metrics will help state-owned banks have stable earnings during the next financial year, aided by the gradual unwinding of regulatory forbearance through the year.
The ratings agency has also said private sector banks are better placed to reap the benefits of recovery and will continue to increase their market share both in credit as well as deposits.
Noting that regulatory forbearance has suppressed state-owned banks’ immediate capital requirements by deferring recognition of stressed loans, the report said private banks are most competitive on this front, too.
The report expects earnings and profitability of banks to recover next fiscal on the back of falling loan impairment charges that improved to 1.2% in H1 of FY22, from 1.7% a year ago, because forbearance will limit fresh loan impairments.