Over the last twelve months, credit offtake expanded by Rs 20.4 lakh crore, deposits by Rs 23.9 lakh crore

The credit offtake continue to grow at the rate of 13.9 year-on-year to reach Rs 168.1 lakh crore for the fortnight ending July 12, 2024, however, the pace of growth was slow, a Care Edge report said.Credit offtake is a type of bank credit that assists businesses in getting financing for future projects.

The credit offtake increased by 14.0 per cent year-on-year but declined by 0.4 per cent sequentially for the fortnight ended July 12, 2024.

Over the last twelve months, credit offtake expanded by Rs 20.4 lakh crore. The report attributed the sluggishness to the higher base effect and banks' focus on restraining the credit-to-deposit (CD) ratio.

Deposits grew by 11.3 per cent year-on-year for the fortnight, including the impact of the HDFC merger, reaching Rs 211.8 lakh crore, driven by growth in time deposits.

"The Credit to Deposit ratio stood at 79.4 per cent for the fortnight (July 12, 2024). Meanwhile, if we study the credit and deposit inflows over the past 3 months and 6 months, we can observe that credit offtake has lagged the deposit growth number.

Hence, the CD ratio derived from these flows from January would be around 70 per cent and from March would be approximately 54 per cent," the report added.

The report added that going forward bank credit offtake could face challenges and is likely to be tepid for the entire year.

Inflows over the past three and six months show credit offtake at 5.3 per cent for six months and 2.3 per cent for three months, lagging deposit growth of 6.0 per cent and 3.4 per cent respectively. Deposits rose by 11.3 per cent year-on-year for the fortnight but declined by 0.5 per cent sequentially.

In absolute terms, deposits expanded by Rs 23.9 lakh crore over the last twelve months.

The report anticipated that the deposit is expected to be strong in FY25 as banks focus on strengthening their liability franchise, sourcing funds through certificates of deposit despite higher costs. As per the data of the report, the absolute growth in credit offtake was Rs 8.4 lakh crore for six months and Rs 3.8 lakh crore for three months, lagging behind deposit growth of Rs 11.9 lakh crore and Rs 7.0 lakh crore for the same periods.

The CD ratio has floated around 80 per cent since September 2023, standing at 79.4 per cent for the fortnight ending July 12, 2024, as per the report.