Credit off take crawls to 20% mark, deposit growth at 15% :: Edelweiss

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 Cash and lending by the banking system, as observed in the Weekly Statistical
Supplement (WSS) for the fortnight-ended October 8, can be stated as below:
1. M3 growth stood at 15.20% compared to 14.70% in the previous
fortnight. While examining the growth rates of money supply and its
components, it is observed that time deposits have shown a decline, from
7.80% in the first half of FY10 to 6.20% in the first half of FY11. Currency
with public on the other hand, has shown higher growth rate from 4.20%
growth in H1FY10 to 6.20% growth in H1FY11; indicating that people are
hoarding cash presumably to meet their higher consumption costs.
2. Annualized deposits growth rate rose to 15.07% Y-o-Y basis
compared to 14.30% for the previous fortnight. In absolute terms time
deposit grew by INR 20bn while the demand deposit grew at a robust INR 790
bn on account of the rising deposit rates from SCBs. Total deposits mobilized
by SCBs this financial year amounts to INR 3.02 trn, which is much below the
RBI target of 18% deposit growth. Based upon the past trend deposits should
have grown by 8.20% as against 6.70% that it has actually achieved. This
would imply that to achieve central bank’s target SCB have to mobilize INR
5.05 trn over the next six months.
3. Credit off take grew at 20% Y-o-Y compared to 19.05% growth for
the previous fortnight. In absolute terms credit off take increased by INR
467 bn compared to INR 394 bn in the previous fortnight on the back of
robust industrial demand for credit. With about 35% of the total credit target
for the year being disbursed in H1FY11, around INR 4.19 trn of credit has to
come forth in the remaining six months.
4. SLR investments increased by INR 32 bn over the fortnight. However
banks have resorted to the repo window for most part of the fortnight to meet
their weekly reserve requirement due to the persistently tightened liquidity in
the market. Average LAF borrowing for the fortnight stood at INR 369 bn
compared to INR 358 bn in the previous fortnight. When adjusted for LAF
bank’s SLR investment declined by INR 204 bn over the fortnight. .
 Total foreign exchange reserves over the week ending October 15 have
risen by $641mn, with the outstanding at $296bn. FII flows have been on
the rise consequent on overseas investors finding the higher rates of returns on
the investment alongside the high growth rate of the Indian economy. For the
period of Apr-Sep, net FII inflows have reached $19.20 bn – $13.80 bn in equity
and $5.40 bn in debt. RBI has been mopping up forex reserves which have
consequently increased its assets to around INR 12 trn, by more than 6.17% in
October over March.
 Outstanding CP & CD issuance saw decline over the fortnight due the sharp rise in
the borrowing cost owing to tightening liquidity in the fortnight. Outstanding CP
stood at INR 1.23 trn while outstanding CD stood at 3.37 trn.