Banking growth slows in June Qtr as economy weak

http://www.business-standard.com/india/news/banking-growth-slows-in-june-quarter-as-economy-weak/178277/on

Indian banks' advances grew marginally in the first quarter of the fiscal year as corporate borrowing was low due to muted economic growth prospects, triggering concerns that lenders could miss the Reserve Bank of India's yearly projections.

Bankers said the pace of loan and deposit growth was also slow in the June quarter because typically corporates prefer to borrow in the second half of the fiscal year.

Banks' credit grew 1.2 percent in the first quarter of the fiscal year that started in April, while deposits rose 1.9 percent, data released by the RBI showed on Wednesday.

The country's economic growth slumped to its lowest level in nine years to 5.3 percent in January-March.

The RBI projects credit growth at 17 percent in 2012/13 and deposit growth at 16 percent.

In the absence of demand for credit, banks continued to park their money in central and state government bonds. Investment in government bonds and other approved securities rose 6.7 percent to 18.6 trillion rupees in the three months to June.


India's industrial output likely accelerated at a modest pace in May on an annual basis from barely any growth at all in April, held back by deep contractions in capital goods, a sign that the pace of overall economic growth remains weak, a Reuters poll showed.