No takers for loans despite rate cuts

Bank credit dipped Rs 2,193 crore during the fortnight ended November 21 to Rs 2,632,700.47 crore. While food credit dipped Rs 2,183 crore, non-food credit dipped Rs 9.43 crore during the fortnight, according to the latest RBI data. Banks have been seeing a slowdown in loans for nearly a month now. Credit has dipped in the fortnight, during which most banks reduced their benchmark prime lending rates around which most loan deals are concluded. Bankers attribute the dip to poor demand from borrowers. Bank investments in government and other approved securities dipped Rs 2,168 crore during the fortnight to touch Rs 1,06,890 crore as on November 21. This is largely because many banks are redeeming bonds issued under market stabilisation scheme (MSS) — that were issued to mop up liquidity infused through dollar purchases. Though investments in government bonds dipped Rs 2,202 crore during the fortnight, that in other approved securities, which comprises select notified PSU bonds, rose Rs 34.1 crore during the fortnight. On the liabilities side, however, deposits mobilised by commercial banks rose Rs 2,616 crore. While demand deposits dipped Rs 11,563 crore, term deposits rose Rs 14,179 crore. Only term deposits have shown some perceptible growth in the latest fortnight ended November 21.