Key Highlights: 

  • Private banks deposit growth at 20% in FY17
  • PSU banks credit growth at 0.8% in FY17
  • Private banks credit growth at 17.5% in FY17

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Financial year 2016 – 17 (FY17) was challenging for Indian banking system as it dealt with bad loans, demonetisation and single-digit loan growth. 

However, private banks outperformed public sector undertakings (PSU) banks in not only deposit growth but also credit growth.

Latest data of Financial Stability Report show that where private banks deposit growth stood at 20% as on March 2017, PSU Banks deposit growth was at single-digit of 9% for the same period.

ALSO READ: Bank credit growth will inch up this year but will still remain weak

Nitin Aggarwal and Renish Patel, analysts at Antique Stock Broking Limited said, ''We expect FY18E to end with credit growth of 10% yoy led by continued traction in retail loans even as industrial credit demand remains muted. We note that as per latest print the systemic retail loan growth stands at 15% y-y led by strong traction in Personal loans, Credit card and Vehicle segment while Housing segment has reported slight moderation in growth."

The duo added, ''We believe that banks will remain saddled with surplus liquidity until 1HFY18E which will act as a drag on margins while widening differential between base rate and MCLR will catalyze refinancing activity thus leading to accelerated repricing of lending portfolio.''