Mumbai: Bank credit growth decelerated to an over five-decade low of 6.14 per cent in the fiscal ended March 31, 2020, amid a faltering economy, lower demand and risk aversion among banks, RBI data showed.
Bank advances growth in FY20 was the slowest since the fiscal ended March 1962, when loans had grown by 5.38 per cent.
In the week ended March 27, 2020, advances stood at Rs 103.71 lakh crore as against Rs 97.71 lakh crore as on March 29, 2019, according to Reserve Bank data.
"The economy during the year was weak which led to demand slowdown. Also, there was higher risk aversion among banks," Fitch Ratings Director (Financial Institutions) Saswata Guha said.
The country's economic growth slowed to a near seven-year low of 4.7 per cent in October-December 2019 compared to 5.1 per cent in the second quarter and 5.6 per cent in the first quarter of the current fiscal.
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Guha said one has to see the June quarter numbers, when the impact of Covid-19 on the overall economy will be visible.
In its latest monetary policy report released recently, RBI had said credit growth is likely to remain modest, reflecting weak demand and risk aversion due to the disruptions caused by the coronavirus pandemic.
During FY20, bank deposits grew by 7.93 per cent to Rs 135.71 lakh crore as against Rs 125.73 lakh crore, the RBI data showed.
The growth in deposits was slowest since FY18, when it had increased by 6.21 per cent.
In FY19, credit offtake was 13.29 per cent while deposits grew by 10.04 per cent.
(PTI Report)
