The credit growth of banks increased marginally compared to the last fortnight, amid an increase in retail loans along with a recorded marginal uptick in corporate loans. According to a recent research report released by CARE Ratings, the credit growth, however, remained low as compared to the corresponding period a year ago, reflecting a subdued demand and risk aversion in the banking system especially towards the corporate segment. Whereas, deposits growth remained flat at 11.3 per cent, as of December 18, 2020, as compared to the last fortnight. Deposits growth increased on a year-on-year basis, as it stood at 10.1 per cent as of December 20, 2019. However, in value terms, the bank deposits have declined as compared with the previous fortnight, specifically, declined by around Rs.1 lakh crore.
A similar trend was observed in the last few years wherein deposits (value) decreased during the last fortnight of December. Furthermore, as of December 18, 2020, the liquidity surplus in the banking system stood at Rs.4.6 lakh crores. The liquidity surplus can be ascribed to the deposit growth outpacing the credit growth persistently.