Bank credit and deposits grew 6.18 and 11 per cent to Rs 102.45 lakh crore and 138.7 lakh crore in the fortnight ended June 19, respectively, according to the Reserve Bank of India (RBI). In the fortnight ended June 21, 2019, the bank credit stood at Rs 96.48 crore and deposit rate stood at 124.92 lakh crore.
In the previous fortnight that ended on June 5, advances had grown 6.24 per cent and deposits by 11.28 per cent, respectively. Notably, a recent CRISIL report suggests bank credit growth will likely take a big hit and could reach a "multi-decadal low" of 0-1 per cent in 2020-21, primarily due to the effect of COVID-19 pandemic on Indian economy.
However, non-food bank credit, credit to agriculture, services sector credit and personal loans saw deceleration in May. On a year-on-year (y-o-y) basis, non-food bank credit growth decelerated to 6.8 per cent in May from 11.4 per cent in May 2019. Credit growth to agriculture and allied activities decelerated to 3.5 per cent in May 2020 from 7.8 per cent in May 2019. Credit growth to the services sector slowed down to 11.2 per cent in May from 14.8 per cent in May 2019. Personal loans growth decelerated to 10.6 per cent in May from 16.9 per cent in May 2019, the RBI data suggests.
With the continuous rise in coronavirus cases, India is staring at 5th recession. The International Monetary Fund (IMF) recently predicted that the Indian economy will contract 4.5 per cent during the financial year 2020-21 on the back of extended coronavirus lockdown. This happens to be the IMF's worst growth projection for India since 1961.
With PTI inputs