Business Line
Mumbai, April 10 Bank credit rose substantially by Rs 79,499 crore for the fortnight ended March 27 as banks tried to increase the credit offtake to meet the year-end disbursal targets.
While non-food credit increased by Rs 81,190 crore to Rs 27,23,801 crore, food credit fell by Rs 1,691 crore to Rs 46,211 crore.
While bank credit grew by 3 per cent to Rs 27,70,012 crore for the fortnight, the growth was 3.3 per cent in the year ago period.
Last year, as on March 28, 2008, bank credit was up by Rs 74,997 crore.
Advances from the banking industry generally increase during the last fortnight of the fiscal as it is important from the point-of-view of the banks’ balance sheets.
Most banks try to ensure that the advances that have been sanctioned are disbursed during this period to shore up their balance sheets, said a senior bank official from a leading public sector bank.
Mutual funds that face redemption pressures around this time also must have availed themselves of credit from banks, said an analyst.
Short-term advances
So, this period typically sees banks extending a lot of very short-term kind of advances, the bank official said.
For the banks, lending to mutual funds even at 6.5 per cent is more profitable than parking money with RBI through the reverse repo window, which only offers 3.5 per cent, the bank official added.
He also said that in the next one or two weeks there could be a fall of around 60 per cent in bank credit, which could give the real picture of the credit offtake.
Mumbai, April 10 Bank credit rose substantially by Rs 79,499 crore for the fortnight ended March 27 as banks tried to increase the credit offtake to meet the year-end disbursal targets.
While non-food credit increased by Rs 81,190 crore to Rs 27,23,801 crore, food credit fell by Rs 1,691 crore to Rs 46,211 crore.
While bank credit grew by 3 per cent to Rs 27,70,012 crore for the fortnight, the growth was 3.3 per cent in the year ago period.
Last year, as on March 28, 2008, bank credit was up by Rs 74,997 crore.
Advances from the banking industry generally increase during the last fortnight of the fiscal as it is important from the point-of-view of the banks’ balance sheets.
Most banks try to ensure that the advances that have been sanctioned are disbursed during this period to shore up their balance sheets, said a senior bank official from a leading public sector bank.
Mutual funds that face redemption pressures around this time also must have availed themselves of credit from banks, said an analyst.
Short-term advances
So, this period typically sees banks extending a lot of very short-term kind of advances, the bank official said.
For the banks, lending to mutual funds even at 6.5 per cent is more profitable than parking money with RBI through the reverse repo window, which only offers 3.5 per cent, the bank official added.
He also said that in the next one or two weeks there could be a fall of around 60 per cent in bank credit, which could give the real picture of the credit offtake.
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