According to recent press reports, the banks in India have observerd a negative growth in loans so far in the current financial year, as is used to be in the beginning of a financial year.
The results announced by the Resrve Bank of India said that the outstanding loans fell by Rs 19,660 crore or 0.5% to Rs 39, 20,000 crore as of April 22 from Rs 39, 40,000 crore as of March 25.
In the same period the deposits have gone up by Rs 1, 15,000 crore or 2.2% to Rs 53, 20,000 crore in the same period. Last year loans grew up by 22% and deposits 18%.
The banks usuallly take number of short-term loans at end of a quarter to shore up their balance sheet, these loans mature at beginning of the next quarter, leading to lower credit growth numbers. Banks’ loan demand usually remains hushed in the first half of a financial year. The Reserve Bank of India has projected loan growth of 19% and deposit growth of 17% in 2011/12 at the annual policy statement.