Lok Sabha Question No. 808 (UNSTARRED), answered on 2015-07-24
Subject: Bank Credit Growth
Ministry: FINANCE
Asked by: MALLIKARJUN  KHARGE

**GOVERNMENT OF INDIA**

**MINISTRY OF FINANCE**

**DEPARTMENT OF FINANCIAL SERVICES**

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**LOK SABHA**

**UNSTARRED QUESTION NO. 808**

**TO BE ANSWERED ON JULY 24, 2015/SHRAVANA 2, 1937 (SAKA)**

**“Bank Credit Growth”**

**QUESTION**

**808. SHRI MALLIKARJUN KHARGE:**

Will the Minister of FINANCE be pleased to state:

1. whether the bank credit growth dropped to a 18-year low while deposit growth fell to a 19-year low in 2014-15: and

1. if so, the details thereof and the reasons therefor along with the sector-wise growth of various sectors during each of the last three years;

**ANSWER**

The Minister of State in the Ministry of Finance

**(SHRI JAYANT SINHA)**

(a) and (b): There has been a deceleration in growth of bank credit and deposits  of scheduled Commercial Banks(SCBs) in 2014-15 as compared to previous years. Details of year on year growth of aggregate deposit and bank credit of SCBs for the last 19 years is given at **Annexure-I.**

The deceleration in growth of bank credit in the year 2014-15 was mainly due to slow down in non food credit offtake in the first half of the year and the demand for bank credit from the corporate sector being modest on account of restrained economic activity. Weak profitability and higher leverage of the corporates, rising NPA levels of state owned banks & their subsequent capital erosion led to more cautious lending. Further, the burden of the stalled projects and weak investment sentiment caused by high cost of funds coupled with weak aggregate domestic demand added to the constraints.

The deceleration in growth rate of aggregate deposit in the year 2014-15 was mainly due to lower accretion of non-resident deposits. In the previous year, there was large mobilization of Non Resident Indians (NRIs) deposits under the concessional swap scheme offered by Reserve Bank of India during September-November, 2013.

Details of sector wise credit growth in the last three years are given at **Annexure-II.**

**Statement referred to in respect of part (a) of Lok Sabha Unstarred Question No. 808 for 24.7.2015 raised by Shri Mallikarjun Kharge regarding “Bank Credit Growth”**

**Annexure-I**

| **Aggregate Deposits and Bank Credit of Scheduled Commercial Banks (Y-o-Y Growth Rates (in per cent) for the last 19 years)**   |                                                                                                            |                                                                                                            |
|---------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
|                                                                                                                                 | **Year on year Growth(in per cent)**                                                                       |                                                                                                            |
| **Year**                                                                                                                        | **Aggregate Deposits**                                                                                     | **Bank Credit**                                                                                            |
| 1996-97                                                                                                                         | 16.5                                                                                                       | 9.6                                                                                                        |
| 1997-98                                                                                                                         | 18.4                                                                                                       | 16.4                                                                                                       |
| 1998-99                                                                                                                         | 19.3                                                                                                       | 13.8                                                                                                       |
| 1999-00                                                                                                                         | 13.9                                                                                                       | 18.2                                                                                                       |
| 2000-01                                                                                                                         | 18.4                                                                                                       | 17.3                                                                                                       |
| 2001-02                                                                                                                         | 14.6                                                                                                       | 15.3                                                                                                       |
| 2002-03                                                                                                                         | 16.1                                                                                                       | 23.7                                                                                                       |
| 2003-04                                                                                                                         | 17.5                                                                                                       | 15.3                                                                                                       |
| 2004-05                                                                                                                         | 13.0                                                                                                       | 30.9                                                                                                       |
| 2005-06                                                                                                                         | 24.0                                                                                                       | 37.0                                                                                                       |
| 2006-07                                                                                                                         | 23.8                                                                                                       | 28.1                                                                                                       |
| 2007-08                                                                                                                         | 22.4                                                                                                       | 22.3                                                                                                       |
| 2008-09                                                                                                                         | 19.9                                                                                                       | 17.5                                                                                                       |
| 2009-10                                                                                                                         | 17.2                                                                                                       | 16.9                                                                                                       |
| 2010-11                                                                                                                         | 15.9                                                                                                       | 21.5                                                                                                       |
| 2011-12                                                                                                                         | 13.5                                                                                                       | 17.0                                                                                                       |
| 2012-13                                                                                                                         | 14.2                                                                                                       | 14.1                                                                                                       |
| 2013-14                                                                                                                         | 14.1                                                                                                       | 13.9                                                                                                       |
| 2014-15                                                                                                                         | 10.7                                                                                                       | 9.0                                                                                                        |
| Source; RBI                                                                                                                     | Source; RBI                                                                                                | Source; RBI                                                                                                |
| Note: Year to year comparison may not be proper due to entry of new banks and merger/closure of old banks.                      | Note: Year to year comparison may not be proper due to entry of new banks and merger/closure of old banks. | Note: Year to year comparison may not be proper due to entry of new banks and merger/closure of old banks. |

**Statement referred to in respect of part (b) of Lok Sabha Unstarred Question No. 808 for 24.7.2015 raised by Shri Mallikarjun Kharge regarding “Bank Credit Growth”**

**Annexure-II**

**Year on year (Per cent) Growth in Credit (Sector wise)**

| **Year**    |   **Bank Credit** |   **Non-food Credit** |   **Agriculture** |   **Industry** |   **Personal Loans** |   **Services** |
|-------------|-------------------|-----------------------|-------------------|----------------|----------------------|----------------|
| **1**       |                 2 |                     3 |                 4 |              5 |                    6 |              7 |
| **2012-13** |              14.1 |                  14.0 |               7.9 |           15.1 |                 14.7 |           12.6 |
| **2013-14** |              13.9 |                  14.2 |              12.9 |           12.8 |                 12.5 |           16.1 |
| **2014-15** |               9.0 |                   9.3 |              15.0 |            5.6 |                 15.5 |            5.7 |

Source: RBI

Note: Data in columns 2 and 3 based on Section 42, Form ‘A’ returns of all SCBs (including RRBs), data in columns 4-7 is based on returns from select banks.

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