Bank credit rose Rs 103,318 crore during January 1 to February 22, more than deposit growth of Rs 88,062 crore, data from Reserve Bank of India (RBI) shows.
The incremental credit-deposit ratio is at 117 per cent, clearly pointing to the pressure in the banking system to garner resources.
During the fortnight ending February 22, bank credit grew Rs 26,200 crore, while deposits declined Rs 9,200 crore.
Growth in deposit has slowed because inflation-adjusted returns are not attractive, pushing retail investors to invest in gold, which is seen as a hedge against inflation.
In the previous fortnight ending February 8, banks saw a credit growth of Rs 50,610 crore and deposit growth of Rs 44,999 crore. To stem the deposit outflow, banks have started increasing interest rates. This comes even as the financial year is expected to end.
For every Rs 100 deposit that a bank mobilises, it has to invest Rs 23 in government securities and park Rs 4 with the RBI as cash reserve ratio, leaving it with Rs 73 to make loans.
Bankers say currently the credit demand is coming mostly from small and medium enterprises and retail segments.
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