A recent press report said that the growth in lending loans have not shown any positive signs during this festival season. The fall in the credit growth from 21.5 percent to 19.45 percent starts at the beginning of the financial year. The negative growth in lending loans starts from first week of October, amount to Rs 68,533 crore. During the same week the Deposit fell down up to Rs 83,000, on a whole the Deposit rate increased to 17.36 per cent.
According to Mr. N. Seshadriop, executive director, Bank of India, the Borrowers, both in retail as well as corporate expect some stability in the interest rates. According to Mr. P. Sitaram, chief financial officer, IDBI Bank the decrease in outstanding credit is seen at the end of every quarter. The Economic Growth has an impact on the Demand; it will react according to the growth of the Economy.
Reports said that the rupee deposit of banks have fallen from 76 percent to 55 per cent in the first six months of the current financial year. It added saying that the droopiness in credit growth was because of rate hikes by Reserve Bank of India (RBI). The RBI has hiked key interest rates 13th times since March, 2010 in order to control inflation. The hike has made car loan, home loans, persona loans and other loans more expensive.
Banks have also increased the lending rates by 250-275 basis points in the last 15 months. Banks which has responded to the central bank’s rate rise had increased their benchmark lending rates by 250-275 basis points in the last 15 months.