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Saturday, November 13, 2010
Morning News (click on link to read article) IFCI research, 08/12/2010
Wednesday, November 3, 2010
Credit growth robust at 22.70%:: Edelweiss
Credit growth robust at 22.70%;Credit-Deposit ratio inches higher on the back of
sluggish deposit growth
Our observations: Tracking Investment and Credit
Cash and lending by the banking system, as observed in the Weekly Statistical
Supplement (WSS) for the fortnight-ended November 19, can be stated as below:
1. Annualized deposits growth rate remained sluggish at 15.78%
compared to 15.34% for the previous fortnight. In absolute terms the
deposits increased by INR 394 bn from previous fortnight. SCBs increased
their deposit rates by 50-75 bps across maturities to thrust mobilization of
deposits. For the fortnight ending 19th Nov, time deposits decreased by INR 54
bn while demand deposits grew by INR 448bn.
2. Y-o-Y credit off take remained robust at 22.70%. In absolute terms, off
take increased by INR 273 bn over the fortnight. With about 48% of the total
credit target for the year being disbursed in the first 8 month of FY11, around
INR 3.32 trn of credit has to come forth in the remained 4 months. However
major SCBs remain confident about meeting the targeted credit growth, given
the robust growth in the economy and the skewed demand for funds from the
corporate.
3. SLR investments decreased by INR 124bn over the fortnight. LAF
window continued to be in the injection mode for the fortnight on account of
the persistent tightness in the liquidity. In order support SCBs, the central
bank has allowed them to seek waiver of penal interest up to 28th Jan 2011,
for any shortfall in SLR maintenance arising out of availment of LAF facility.
4. M3 growth dangles around the central bank’s target of 17%. Y-o-Y M3
growth stood at 16.20% compared to 15.90% in the previous fortnight. In
absolute terms, M3 grew by INR 481 bn over the fortnight reflected in the
sharp improvement of credit deposit ratio to 73.40. However money multiplier
as on November 19 dropped by 24 bps to 4.93X.
Total foreign exchange reserves decreased by USD 4 bn for the week ending
Nov 25, with the outstanding at USD 294 bn. The dollar index strengthened over
the fortnight, on concerns about the Euro zone crisis, reflecting a depreciation of
non-US currencies.
O/s commercial paper increased to INR 1.5 trn for the month ended 31st
October owing to a sharp rise in demand for short term funds from NBFC for
financing primary issuances. Borrowing cost on short term instruments ranged
between 7%-18%, reflective of the abrupt surge in the demand for funds in the CP
market. O/s CDs remained stable at INR 3.32 trn since banks refrained from
renewing CDs at such elevated levels.
sluggish deposit growth
Our observations: Tracking Investment and Credit
Cash and lending by the banking system, as observed in the Weekly Statistical
Supplement (WSS) for the fortnight-ended November 19, can be stated as below:
1. Annualized deposits growth rate remained sluggish at 15.78%
compared to 15.34% for the previous fortnight. In absolute terms the
deposits increased by INR 394 bn from previous fortnight. SCBs increased
their deposit rates by 50-75 bps across maturities to thrust mobilization of
deposits. For the fortnight ending 19th Nov, time deposits decreased by INR 54
bn while demand deposits grew by INR 448bn.
2. Y-o-Y credit off take remained robust at 22.70%. In absolute terms, off
take increased by INR 273 bn over the fortnight. With about 48% of the total
credit target for the year being disbursed in the first 8 month of FY11, around
INR 3.32 trn of credit has to come forth in the remained 4 months. However
major SCBs remain confident about meeting the targeted credit growth, given
the robust growth in the economy and the skewed demand for funds from the
corporate.
3. SLR investments decreased by INR 124bn over the fortnight. LAF
window continued to be in the injection mode for the fortnight on account of
the persistent tightness in the liquidity. In order support SCBs, the central
bank has allowed them to seek waiver of penal interest up to 28th Jan 2011,
for any shortfall in SLR maintenance arising out of availment of LAF facility.
4. M3 growth dangles around the central bank’s target of 17%. Y-o-Y M3
growth stood at 16.20% compared to 15.90% in the previous fortnight. In
absolute terms, M3 grew by INR 481 bn over the fortnight reflected in the
sharp improvement of credit deposit ratio to 73.40. However money multiplier
as on November 19 dropped by 24 bps to 4.93X.
Total foreign exchange reserves decreased by USD 4 bn for the week ending
Nov 25, with the outstanding at USD 294 bn. The dollar index strengthened over
the fortnight, on concerns about the Euro zone crisis, reflecting a depreciation of
non-US currencies.
O/s commercial paper increased to INR 1.5 trn for the month ended 31st
October owing to a sharp rise in demand for short term funds from NBFC for
financing primary issuances. Borrowing cost on short term instruments ranged
between 7%-18%, reflective of the abrupt surge in the demand for funds in the CP
market. O/s CDs remained stable at INR 3.32 trn since banks refrained from
renewing CDs at such elevated levels.
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