Bank credit in FY17 grew 5.1% to Rs 3.81 lakh cr

Bank credit in FY17 grew 5.1% to Rs 3.81 lakh cr

Bank credit during 2017 grew 5.1% to Rs 3,81,390 crore, according to data released by the Reserve Bank of India.

Outstanding bank credit as on March 31, 2017, stood at Rs 78,81,890 crore, the RBI said. According to reports, the bank credit growth for the fiscal ended March 31, 2017, is the lowest in over 60 years.

Aggregate deposits for scheduled commercial banks rose Rs 2,63,110 crore to Rs 1,08,05,150 crore in the fortnight till March 31, 2017, the RBI said.

Rating agency Icra believes that banks, especially public sector banks (PSBs), have been reporting dip in net interest income due to slower credit growth and various other reasons.

“With asset quality pressures, banks, especially the weaker PSBs have been reporting a continuous degrowth in their net interest income (NII) over the five consecutive quarters of Q3FY2016 to Q3FY2017 mainly on account of slower credit growth, reversal of interest income recognised on accrual basis on NPA accounts and increase in NPA levels resulting in decline in earning assets,” ICRA had stated recently.

Icra also believes that banks are likely to report weak profits in the current fiscal (FY18).
“Weakening cost to income ratios for PSBs and elevated credit costs is expected to result in weak net profitability of banks with estimated profit after tax of 5-10 basis points for FY2018,” Icra had stated recently. This will translate into low single digit return on equity (RoE) for PSBs; while RoE for the private banks is projected to be over 10% for private banks during FY2018, states Icra.
 

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