Bank business sparkles this Diwali November 15, 2008
Posted by dhirendra1972 in Bank Securities, Equity Market, Global Market, Loans, Marginal Growth, Raised Deposits, Savings and Current Account, Term Deposit.Tags: Banks, Bonds, Growth
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The flight to safety has resulted in term deposits rising Rs 94,811 crore to Rs 30,40,276 crore during the month of October alone. The growth is largely on account of special schemes launched by most banks where they offered returns of around 10.5%. In fact, term deposits have been rising since September, following the collapse of Lehman Brothers which triggered a sharp fall in the equities market globally. As a result, investors were seen withdrawing money from mutual funds and equities market and depositing it with banks.
Also, several depositors may have shifted deposits from savings and current account to term deposits. This is indicated in RBI data, which shows that demand deposits (saving and current account) have dipped in October by Rs 21,509 crore.
But even as banks were offering higher rates, deposits are growing at a slower pace than loans. October saw non-food credit — loan to the manufacturing sector, individuals and industry — rise Rs 1,02,760 crore while deposits grew Rs 73,302 crore. Till October end, on a year-on-year basis, credit rose 28.5% whereas deposits increased 20.7%.
RBI data also shows that bank loans to corporates have doubled to Rs 2,82,37 crore between April and October 2008 compared with Rs 1,41,837 crore in the corresponding period last year. However, the same period has seen a marginal growth in deposits. For instance, between April and October 2008, deposits stood at Rs 3,18,500 crore as against Rs 3,01,563 crore in the corresponding period last year. Meanwhile, investments in government bonds stood at Rs 18,717 crore in October 2008.
