Rising Borrowing Cost Has Slackened Q1 Loan Growth

By | June 1, 2011

According to a recent press release banks have lent Rs 147,667.36 crore in the first quarter of FY12 and gathered together almost double the amount in deposits at Rs 283,978.92 crore during the same period.

The reports from the Reserve Bank of India said that the total bank credit stood at Rs 4,086,326 crore as on July 1, up Rs 84,805.5 crore, over the previous fortnight’s levels.  Total deposits amounted to Rs. 5,488,682 crore, up Rs 143,980.6 crore, over the last fortnight levels.

The bankers have said that the slow down in the pace of loan was due to the rise in interest rates. Mr.S Raman, CMD, Canara Bank said that the rise in interest rates has impacted the borrowing plan of customers. He added saying that loan growth in the first quarter of FY11 was at Rs 161,991.1 crore and the quarterly growth in deposits in the same period last year was, however, lower at Rs 146,129.6 crore. He said that the higher interest rate offered by banks for deposits have brought down the huge difference.

According to the latest RBI data for April- May, petroleum and telecom industries had higher credit of take than last year’s levels. Loans to petroleum companies have gone up to 15.65% compared with a dip of 19.7%.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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