The bank credit growth remained flat over the last fourteen days and was restricted from declining further as customers had started purchasing due to the festive season leading to retail demand along with various online shopping portals offering Diwali sale offers, according to a recent research report released by CARE Ratings. According to data complied by the report, the credit growth of banks declined to 5.7 per cent and 5.8 per cent during the last two fortnights, as compared to last year’s level of 8.1 per cent and 8.0 per cent, respectively ((as of November 08, 2019 and November 22, 2019) reflecting a subdued demand and risk aversion in the banking system towards the corporate segment. 

Banks such as Axis Bank, HDFC Bank, ICICI Bank, and others had announced various offers to push the retail credit. Additionally, the bank credit growth was also supported by disbursements under the emergency credit line guarantee scheme (ECLGS) which has been extended further till March 31, 2021.
 

Deposits Growth

According to the report, the deposits increased by 10.9 per cent (as of November 20, 2020) compared to 9.7 per cent last year (November 22, 2019) and 10.6 per cent as compared with the previous fortnight (November 06, 2020). Moreover, as of November 20, 2020 the liquidity surplus in the banking system was at Rs.5.20 lakh crores. The liquidity surplus can be ascribed to the deposit growth outpacing the credit growth persistently.

However, government borrowings (States: ₹ 24,192 crores and Central: ₹ 22,000 crores) limited the banking system liquidity surplus during the fortnight period. The banking system liquidity is expected to remain in a surplus position aided by sustained growth in bank deposits as against a slower growth in the bank credit. 
 

Credit-To-Deposit Ratio

The Credit to Deposit (CD) ratio has stood at a similar level (72.6 per cent) during the last two fortnights ended November 06, 2020 and November 20 2020 (76.1 per cent last year) due to slower growth in credit.