Bank Credit

Crisil Ratings expects bank credit growth to accelerate in H2 FY26 to 11-12%, driven by retail loans and NBFCs, with corporate credit growth rebounding to 9.7%

UPI is an instant real-time payments system that allows users to transfer money across multiple banks without disclosing bank account details

Banks were engaged in intense competition by offering higher interest rates on term money to mop up funds

Meanwhile, issuance of commercial papers---securities sold by companies to raise funds--dropped sharply to Rs 12.5 trn in FY23 (up to Feb 28) from Rs 19 trn over the same period last year

While credit growth has moderated from 16.5% in mid-January, it is significantly higher than the year-ago period, when it was hovering at around 9 per cent

Corporate results indicate improving demand

About a month ago (January 13 fortnight), credit growth stood at 16.5 per cent YoY

It had moderated to 14.9 per cent YoY in the fortnight ended December 30 due to base effect, but subsequently picked up as the base effect eased out

The bonds, which are likely to receive a rating of AA+, may go up for bidding on February 20 with issuance scheduled for the next day

Deposit growth has gathered pace to 10.6%

Ind-Ra said the credit expansion of (Rs 6.1 trillion) does not seem like a stretch goal, given the level of economic activity in the system

The Indian banking sector performance was led by stronger than-expected credit growth after years of a lackluster performance, sharp margin uptick benefiting from the rate cycle

Credit growth in the system has touched a decade high, a level seen last in 2011

Topline growth should outweigh any pressure on margins

The relentless fight against Cryptocurrencies, CBDC taking baby steps, and bank Credit growth at a decadal high

It is leveraging the digital ecosystem, focusing on acquisition of corporate salary accounts, and also cross-selling products to existing clients

Private bankers said there were signs that the credit demand was durable and as such the landscape for banks' management of assets and liabilities would remain challenging for quite some time

This comes after RBI's monetary policy committee raised repo rate by 35 bps earlier this month to take it to 6.25%

Country's largest lender State Bank of India (SBI) raised deposit rates by 15-100bps, the maximum increase being for bulk deposits

Lower GDP growth, RBI rate hikes, reversal of base effect to blunt credit growth, analysts say