SBI Research: Bank credit growth witnessed 59-year low, just 5.56 percent in 2020-21

SBI Research: Bank credit growth witnessed 59-year low, just 5.56 percent in 2020-21

In order to deal with the Corona epidemic, the central government gave incentive packages but despite this, bank credit growth remained at a low level for the second consecutive year in FY 2021.

In order to deal with the Corona epidemic, the central government gave incentive packages but despite this, bank credit growth remained at a low level for the second consecutive year in FY 2021.

According to SBI Research, bank credit growth stood at 5.56 per cent in FY 2021, the lowest in 59 years. The total credit offtake (trade) in FY 2021 was Rs 109.51 lakh crore, which was lower than in FY 2020 when the bank credit growth was at 58-year low of around 6.14 per cent.

Credit growth was less than this in FY 1962 when it stood at 5.38 per cent. Credit offtake increased by 13.29 per cent in FY 2019.

Despite the decline in credit growth, SBI Research quoted RBI data that system wide deposits have jumped 11.4 per cent and reached a level of Rs 151.13 lakh crore compared to 7.93 per cent in FY 2020.

Credit growth for FY 2008 is the best

According to the SBI Research Report, credit growth was the best in FY 2008 and FY 2008 was also the best in terms of deposit growth. Credit offtake increased by 22.3 per cent and deposits by 22.4 per cent in that financial year.

However, in the next two financial years, it fell by 17 per cent and in FY 2011 it returned to the level of 21.5 per cent. Since then there has been a decline in credit demand and reached a 58-year low in FY 2020 and a 59-year low in FY 2021.

According to the report, the biggest blow to credit offtake in the first half of the last financial year was due to the Corona epidemic, when economic activity was almost stalled. After this, it showed some improvement in the second half from November. However, in spite of the whole year, credit growth reached a low of 59 years.

Deposits increased in April-May 2020 due to lockdown

Deposits increased in April and May 2020 due to the lockdown imposed by the Corona epidemic last year. Deposits increased despite a drop in interest rates as people had fewer spending options due to the lockdown. In FY 2021, deposits grew by 11.4 per cent, while in FY 2020, deposits grew by 7.93 per cent and there were deposits of 135.71 lakh crore. Deposits increased by 10.04 per cent in FY 2019 and 6.21 per cent in FY 2018.

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