BANK loans offtake has touched a new high, amid a boom in real Estate, growing demand for short-term corporate credit, personal and retail loans. Commercial banks have lent Rs 1,00,008 crore between July and September, the highest ever growth in any quarter till date.

The last quarter of 2004-05 had one of the highest growth, but even this was 20% less than the loan off-take in the three months ended September. According to the RBI figures released on Saturday, fresh loan growth in non-food credit amounted to Rs 1,57,284 crore, since end-March '05.

However, for July-September of current fiscal, the growth worked out to Rs 1,00,008 crore. Of this, around Rs 33,000 crore came in the last fortnight alone. The growth in lending is high even if one were to factor in the usual window dressing that results in a bulge in credit figures in the last fortnight of any quarter. Bankers said most of the credit is going into retail, personal loans and short-term corporate credit.

Some of the banks have also taken large exposures to builders and extended loans to stock market investors and brokers.

On an aggregate basis, banks have managed to record strong growth in deposits, but a quarterly breakup of demand and time deposits indicates that during July-September, banks have lent more than what they have raised through term deposits - a more stable source of funds. Bulk of the growth has been on account of a surge in demand deposits. In fact, during the fortnight ended September 30, demand deposits went up Rs 27,881crore. Incremental growth in deposits since endMarch is 12.3% (Rs 2,09,015 crore) against 6.8% (1,02,885 crore) for the same period a year ago. For JulySeptember, aggregate deposit growth was Rs 119,350
crore, against around Rs 20,000 crore in the same period a year ago and Rs 69,917 crore during April-June '05.

On the face of it, deposit growth seems higher than the growth in credit. But term deposits - a more stable source of funding loanshave shown a much lower growth than the rise in credit dudng the period. Much of the growth in deposits during the period has been due to spurt in, demand deposit, which went up Rs 35,882 crore against a dip of around Rs 3,000 crore in the previous quarter.

Demand deposits, however, have emerged as a major source of funds for banks of late, particularly foreign banks and private banks, who find this source much cheaper than term deposits.

The growth in term deposits, on the other hand, has gone up Rs 83.489 crore. This is higher than the amount raised in the same period a year ago and also higher than the amounts raised during April-June (Rs 73,621 crore).

Source : Gayatri Nayak, The Economic Times