Credit Offtake in India Grows Slowly, Reaches Rs. 168.1 Lakh Crore by July 2024
New Delhi [India], August 3, 2024: Credit offtake in India has grown by 13.9% year-on-year, reaching Rs. 168.1 lakh crore for the fortnight ending July 12, 2024. However, the growth pace has slowed down, according to a Care Edge report.
Credit offtake helps businesses get financing for future projects. While it increased by 14% year-on-year, it declined by 0.4% sequentially for the fortnight ending July 12, 2024. Over the past year, credit offtake expanded by Rs. 20.4 lakh crore.
The report attributes the sluggish growth to a higher base effect and banks’ focus on restraining the credit-to-deposit (CD) ratio. Deposits grew by 11.3% year-on-year, reaching Rs. 211.8 lakh crore, driven by growth in time deposits.
The Credit to Deposit ratio stood at 79.4% for the fortnight ending July 12, 2024. The report noted that credit offtake has lagged behind deposit growth over the past three and six months. For six months, credit offtake was 5.3%, and for three months, it was 2.3%, compared to deposit growth of 6.0% and 3.4%, respectively.
In absolute terms, deposits expanded by Rs. 23.9 lakh crore over the last year. The report anticipates that deposits will remain strong in FY25 as banks focus on strengthening their liability franchise and sourcing funds through certificates of deposit despite higher costs.
The absolute growth in credit offtake was Rs. 8.4 lakh crore for six months and Rs. 3.8 lakh crore for three months, lagging behind deposit growth of Rs. 11.9 lakh crore and Rs. 7.0 lakh crore for the same periods. The CD ratio has hovered around 80% since September 2023, standing at 79.4% for the fortnight ending July 12, 2024.
Doubts Revealed
Credit Offtake -: Credit offtake means the amount of money that banks lend to people and businesses. It’s like when you borrow money from a bank to buy something or start a business.
Rs. 168.1 Lakh Crore -: Rs. 168.1 Lakh Crore is a way to say a very large amount of money in Indian currency. 1 Lakh is 100,000 and 1 Crore is 10 million. So, Rs. 168.1 Lakh Crore is a huge sum of money.
Year-on-year -: Year-on-year means comparing something with the same time period in the previous year. For example, comparing July 2024 with July 2023.
Sequentially -: Sequentially means comparing something with the previous time period, like comparing July 2024 with June 2024.
Deposits -: Deposits are the money that people and businesses keep in banks. It’s like when you put your pocket money in a piggy bank, but here it’s in a real bank.
Credit to Deposit ratio -: The Credit to Deposit ratio shows how much money banks are lending out compared to how much money they have from deposits. A ratio of 79.4% means that for every 100 rupees in deposits, the bank has lent out 79.4 rupees.
FY25 -: FY25 stands for the financial year 2025. In India, a financial year starts on April 1st and ends on March 31st of the next year.