Statistical Supplement Report Released By The Deposit - Nov 08, 2008

Weekly Statistical Supplement (WSS) report released by the Reserve Bank of India, indicated that the investment-deposit ratio for the scheduled commercial banks (SCB’s) surged to 30.18% for the fortnight ended 24 October 2008 compared to 28.27% in the previous fortnight.The cut in CRR by 250 bps to 6.5% with effect from fortnight beginning on 11 October 2008, released approximately Rs 87156 crore, on a total deposit of Rs 34,86,221 crore, in to the banking system.

During the fortnight ended 24th October 2008, SCB’s invested about Rs 71,226 crore more in government securities (Rs 10,52,266 crore outstanding as on 24 October). However, bank credit (including food and non-food credit) struggled to expand by just Rs 7637 crore to Rs 26,15,041 crore during the fortnight.

Thus we find that while RBI has cut SLR by 100 basis points effective from 8th November 2008, banks have chosen to rather increase the same to 30.18% as of 24th October 2008. Also, the cut in CRR (totally 350 basis points across October and early November 2008) was to increase liquidity in the banking system, for on lending to the industry. Instead, the Indian banks have followed their US counterparts, and are shying away from credit, and dumping the excess liquidity into government securities.

The bank credit increased 29% to Rs 26,15,041 crore up to 24 October 2008 on y-o-y basis compared with mere 22.5% growth recorded during corresponding period last year. The bank credit in the current financial year up to 24 October 2008 accelerated by 10.7% compared with 4.9% growth posted in the corresponding period in the last fiscal. The non-food credit extended to agricultural & activities, industry, services and personal loans etc, having share of 98.15% in the total bank credit, increased by 28.93% to Rs 25,66,787 crore, while the food credit expanded 22.07% to Rs 45,175 crore on y-o-y basis.

Meanwhile, deposits of SCB have increased 21% to Rs 34,86,221 crore on y-o-y basis as of 24 October. The time deposits rose 15.09% to Rs 30,14,475 crore on y-o-y basis and 12.79% in the current fiscal up to 24 October. The demand deposits surged 15.09% to Rs 4,71,746 crore on y-o-y basis, but declined 10.03% in the current fiscal.