Deposits rise over Rs 2.Eight lakh crore in six weeks of lockdown

MUMBAI: Financial institution deposits have risen by over Rs 2.Eight lakh crore in three fortnights of the lockdown until Might 8, whereas financial institution credit score through the interval dipped by Rs 1.2 lakh crore, in response to knowledge launched by the Reserve Financial institution of India. This has added practically Rs Four lakh crore to the liquidity within the banking system, leading to a surge in investments by banks.

A number of days into the lockdown, on March 27, financial institution deposits stood at Rs 135.7 lakh crore. A fortnight in a while April 10, excellent deposits surged to Rs 137.1 lakh crore. In one other two fortnights, by Might 8, the deposits rose to Rs 138.5 lakh crore — an increase of Rs 2.Eight lakh crore within the six weeks since March 27. These three fortnights additionally noticed financial institution credit score decline from Rs 103.7 lakh crore on March 27 to Rs 102.5 lakh crore on Might 8 — a drop of Rs 1.2 lakh crore in six weeks.

Banks have grown excellent deposits by over 2% in six weeks, whereas the entire of FY20 (as much as March 27) financial institution deposits had gone up by solely 7.9%. The numbers point out a giant shift to financial institution deposits through the lockdown. Many of the cash went into mounted deposits, the place the excellent quantity rose to Rs 123.9 lakh crore on Might 8 — a rise of Rs 4.Four lakh crore over March 27.

Present and financial savings deposit balances declined by Rs 1.6 lakh crore to Rs 14.6 lakh crore. Whereas a decline in financial institution credit score in April is just not uncommon, what accentuates this yr’s decline is that the year-end surge in March, which ends up in a pullback in April, was lacking. In consequence, FY20 credit score progress was solely 6.1% — lower than half of the 13% progress in FY19.

Finance minister Nirmala Sitharaman, in her assembly with banks on Friday, will take up the progress of Covid-related credit score and the extent of pre-approved loans which have been sanctioned. The FM has additionally known as for particulars on the mortgage presents accepted and disbursement effected. The brand new schemes introduced by the federal government below the Atma Nirbhar Bharat Scheme will even be mentioned.

Final week, SBI chairman Rajnish Kumar had mentioned that in April 2020, the general public sector lender had seen a financial institution deposit progress of Rs 1.25 lakh crore, attributing it to a flight to security. He added that credit score progress was detrimental throughout April, resulting in surplus liquidity within the banking system. Talking to TOI, the SBI chairman mentioned that top-rated corporates have been elevating funds from the cash markets.

The quantity excellent below business papers jumped to Rs 4.17 lakh crore as on April 30, 2020, up from Rs 3.81 lakh crore as on April 15, with Rs 77,889 crore of paper being issued through the fortnight. Banks additionally say that small companies will not be availing of further limits as they’ve been ready for the loans that might be subsidised due to the federal government credit score assure, which have not too long ago been notified.

“Individuals’s financial savings are shifting to banks since it’s protected and individuals are not able to spend, whereas commerce, commerce and trade are withdrawing. The federal government should deal with the demand facet by crediting money to the affected sections of the society,” mentioned Maharashtra State Financial institution Staff Federation normal secretary Devidas Tuljapurkar.

He added that the federal government should strengthen banks by addressing points similar to recruitment because the heavy lifting within the type of credit score to MSMEs, Mudra Shishu scheme, road distributors and Kisan bank cards have been shifted to banks. “Within the course of, the main focus is being shifted from company credit score to retail credit score, wherein involvement of the complete workforce is required,” he mentioned.

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