Bank loans grow 21.4% in 2010-11, deposits rise 15.8% |
Bank loans registered a growth of 21.38 per cent in 2010-11, while deposit growth stood at 15.84 per cent, according to data released by the Reserve Bank of India (RBI).
While credit growth was higher than RBI’s projection of 20 per cent in 2010-11, deposit growth fell short of the 18 per cent projection. Deposit growth for 2009-10 was 17 per cent, while the growth in credit was 16 per cent.
The growth in loans came off sharply in the last fortnight of the financial year ended March 25, compared to the previous fortnight, in which credit growth was 23.20 per cent. In the fortnight ended March 25, banks disbursed Rs 82,593 crore worth of loans. Deposits grew by Rs 64,333 crore in the fortnight.
Analysts and bankers said a growth rate of 18 per cent in deposits and 20 per cent in credit should be sustainable for banks in 2011-12. With policy rates expected to rise further, banks may not be willing to raise loan rates, owing to liquidity coming back into the system. Typically in the beginning of a financial year, the demand for loans is slack.
“We feel interest rates have peaked. But since inflation is still high, there is a chance of RBI raising policy rates further in May. However, a rise in policy rates will not necessarily mean an immediate hike in deposit and lending rates,” said RK Bansal, executive director and group head (retail banking), IDBI Bank. He said IDBI Bank had no plans to cut retail term deposit rates, nor to raise lending rates. “For the current financial year, because of a low-base, I expect around 20 per cent growth in deposits. I also expect 18-20 per cent growth in credit,” Bansal said.
Liquidity concerns have also ebbed since the beginning of the financial year, as banks become net lenders to the central bank’s liquidity adjustment facility. Liquidity was in deficit mode during the second half of the current financial year, which saw rates heading north.
“Currently, there are no liquidity pressures. Hence, banks may want to withdraw their special rates on deposits. But banks may not reduce rates, as deposits from retail segment are yet to pick up. So they may want to wait and watch before slashing interest rates on deposits,” said a official from a public sector bank.
BRIC nations are no longer emerging markets as they have become growth markets for world economy, Goldman Sachs Asset Management chairman Jim O'Neill has said. "I don't think of Brazil, Russia, India and China, (BRIC) as emerging markets. It is an insult and inopportune. And in any case, they are different markets," O'Neill, who invented the term 10 years ago, told China Daily in an interview ahead of BRICS summit on Thursday. An expanded version of BRIC, BRICS includes Brazil, Russia, India, China and South Africa, the leaders of which are meeting at Sanya in China for the two-day summit beginning today. "The BRIC economies are increasingly the major story for the world economy, they have lifted the world economy's growth trend from 3.7% to 4.5% in my view," O'Neill said while preferring to use the old acronym BRIC even though South Africa has joined the group making it the BRICS. South Africa is attending the summit for the first time. On South Africa’s entry to the fast-growing countries club, O' Neill said that with $350 billion economy, South Africa was smaller than the BRIC members. Even the economies of India and Russia, the smallest of the original BRIC grouping, are five times bigger than South Africa. "I guess South African involvement may have something to do with Africa as a continent, but I doubt other big countries such as Nigeria see them as their representative," he said.O'Neill said Poland, Saudi Arabia, Argentina and Iran should be called emerging markets. Goldman Sachs plans to redefine the world of emerging markets by adding Mexico, South Korea, Turkey and Indonesia to a new grouping with the four original BRIC members and title them as "growth markets". According to O'Neill, the BRIC countries are the leading "growth economies", and the other four are and will remain smaller. The BRIC economies are currently worth around $11-12 trillion, while the figure for the United States is $15 trillion, he said, observing that by 2018, they will probably be bigger than the US. He estimates that by 2020, the combined GDP of the four original BRIC members will be around $25 trillion, while that of the eight "growth markets" will be around $30 trillion. Bric nation The acronym was coined by Jim O'Neill in a 2001 paper entitled "Building Better Global Economic BRICs".[1][2][3] The acronym has come into widespread use as a symbol of the shift in global economic power away from the developed G7 economies towards the developing world.According to a paper published in 2005, Mexico and South Korea were the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed, as they were already members of the OECD.[4] Several of the more developed of the N-11 countries, in particular Turkey, Mexico, Nigeria and Indonesia, are seen as the most likely contenders to join the BRICs. Some other developing countries that have not yet reached the N-11 economic level, such as South Africa, aspire to BRIC status. Economists at the Reuters 2011 Investment Outlook Summit, held on 6–7 December 2010, dismissed the notion of South Africa joining BRIC.[5] Jim O'Neill told the summit that he was constantly being lobbied about BRIC status by various countries. He said that South Africa, at a population of under 50 million people, was just too small an economy to join the BRIC ranks.[6] Goldman Sachs has argued that, since the four BRIC countries are developing rapidly, by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population.[7][8] Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, as the European Union has done.[9] However, there are some indications that the "four BRIC countries have been seeking to form a 'political club' or 'alliance'", and thereby converting "their growing economic power into greater geopolitical clout".[10][11] On June 16, 2009, the leaders of the BRIC countries held their first summit in Yekaterinburg, and issued a declaration calling for the establishment of an equitable, democratic and multipolar world order. Since then they have met in Brasília in 2010 and will meet in China in 2011.[12] Summits
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