The bank credit growth increased marginally compared to last fortnight which can be ascribed to an increase in retail loans along with a marginal uptick in corporate loans. However, the credit growth remained low compared with year-ago period (7.1% as of December 20, 2019) reflecting subdued demand and risk aversion in the banking system especially towards the corporate segment. Additionally, the bank credit growth has also been supported by disbursements under the ECLGS scheme which has been extended further till March 31, 2021. However, SCBs are being very selective with their credit portfolios due to asset quality concerns.
Deposits growth remained flat at 11.3% (as of December 18, 2020) compared to last fortnight and increased on y-o-y basis (10.1% as of December 20, 2019). Whereas, in value terms the bank deposits have declined compared with previous fortnight (decreased by around Rs.1 lakh crore). This similar trend has been observed in the last few years wherein deposits (value) declined during last fortnight of December. Moreover, as on December 18, 2020 the liquidity surplus in the banking system stood at Rs.4.6 lakh crores. The liquidity surplus can be ascribed to deposit growth outpacing credit growth persistently