TIL Desk/Business/Mumbai/ The slowdown in the Indian economy has cast a pale shadow on the credit growth of lenders. The Financial Stability Report (FSR), released by the Reserve Bank of India, says credit growth moderated to 8.7 per cent on a year-on-year (y-o-y) basis in September 2019 from 13.2 per cent in March 2019.
In the same period, however, deposit growth improved to 10.2 per cent from 9.9 per cent, thereby exceeding the credit growth. This is for the first time since Q2 of FY17 that the credit growth has fallen below the deposit growth. On the profitability front, public sector banks profitability ratios were muted because of weak credit growth as well as slow resolution of bad assets.
Similarly, private banks profitability ratios also declined whereas foreign banks showed an improvement. While the asset quality of banks remained stable in September 2019 as compared to March 2019 with gross NPAs at 9.3 per cent, however, the FSR report of the RBI says that the bad loans may rise in the coming months and reach 9.9 per cent by September 2020.
