The surge in credit growth in the current fiscal year (FY22) has been driven by a gradual pick-up in bank lending in metropolitan centers, signaling a widespread economic recovery, the Reserve Bank of India said on Friday.
Year-on-year credit growth in the metropolitan area, which accounts for over 60% of bank lending, fell from 1.7% in fiscal 21 (April 2020-March 2021) to 4.6% in 12 months until September. 2021. The 12-month growth rate was 3.6 percent through September 2020, according to RBI data, while it was 2.7 percent over the 12-month period ended June 2021.
Metropolitan centers are defined as those with a population of 1 million or more. Branches in urban, semi-urban and rural centers recorded double-digit growth.
The rate of growth in bank credit rose to 7.0% over the 12-month period ending in September, compared to 5.6% in FY21 and 5.8% a year ago.
The growth rate of aggregate deposits moderated slightly to 10.1% in the 12 months ending in September, from 11.0% a year ago. Bank branches in metropolitan centers, which represent more than half of total deposits, were behind the mobilization of deposits by banks.
Private sector banks recorded 10.9% growth in credit and 16.0% growth in deposits during the year-on-year period. Their public sector counterparts lagged behind with much lower growth rates – at 3.7% for credit and 7.4% for deposits, respectively.
The share of current account and savings account deposits in total deposits is gradually increasing and stood at 44.3% at the end of September 2021.
As deposit mobilization outpaced loan growth, the credit-to-deposit (CD) ratio for all of India declined to 70.0% through September of this year, from 72.0% il a year ago. The CD ratio of metropolitan branches, which hold a predominant share in banking activities, was 82.8% over the period, compared to 88.4% a year ago.