Indian banks have no respite as high interest rates and rising inflation continue to affect both credit and deposit growth. According to the latest RBI data, the credit and deposit growth in Indian banks stood at 14.2 per cent and 13.7 per cent respectively year-on-year during the fortnight to July 12. This is short of central bank's projection of 15 and 14 per cent respectively for the current fiscal year.
The data also showed that, on the fortnightly basis, banks' credit fell by Rs 16,620 crore while deposits came down by Rs 10,300 crore during the fortnight ended July 12.
Deposits have been a major cause of worry for banks as they continue to be sluggish even as retail deposit rates remain high. Despite RBI's rate cuts, banks have mostly left their deposit rates unchanged.
However, bankers said that credit growth generally remains sluggish during the first half of the fiscal, and picks up during the second half.