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The <keyword id="21570567" type="General" weightage="100" keywordseo="credit-offtake" source="keywords">credit offtake</keyword> continued to grow at the rate of 13.9% year-on-year to reach Rs. 168.1 lakh crore for the fortnight ending July 12, 2024. However, the pace of growth was slow, a Care Edge report said. Credit offtake is a type of <keyword id="19946069" type="General" weightage="20" keywordseo="bank-credit" source="keywords">bank credit</keyword> that assists businesses in getting financing for future projects. The credit offtake increased by 14.0% year-on-year, but declined by 0.4% sequentially for the fortnight ended July 12, 2024. Over the last twelve months, credit offtake expanded by Rs. 20.4 lakh crore. The report attributed the sluggishness to the higher base effect and banks' focus on restraining the credit-to-deposit (CD) ratio. <keyword id="20218853" type="General" weightage="20" keywordseo="deposits" source="keywords">Deposits</keyword> grew by 11.3 % year-on-year for the fortnight, including the impact of the HDFC merger, reaching Rs. 211.8 lakh crore, driven by growth in time deposits. "The <keyword id="20575555" type="General" weightage="20" keywordseo="credit-to-deposit" source="keywords">Credit to Deposit</keyword> ratio stood at 79.4 % for the fortnight (July 12, 2024). Meanwhile, if we study the credit and deposit inflows over the past 3 months and 6 months, we can observe that credit offtake has lagged the deposit growth numbers. Hence, the <keyword id="20048508" type="General" weightage="20" keywordseo="CD-ratio" source="keywords">CD ratio</keyword> derived from these flows from January would be around 70% and from March would be approximately 54%," the report added. The report added that going forward, bank credit offtake could face challenges, and is likely to be tepid for the entire year. Inflows over the past three and six months show credit offtake at 5.3% for six months and 2.3% for three months, lagging behind deposit growths of 6.0% and 3.4% respectively. Deposits rose by 11.3% year-on-year for the fortnight, but declined by 0.5 % sequentially. In absolute terms, deposits expanded by Rs. 23.9 lakh crore over the last twelve months. The report anticipated that the deposit is expected to be strong in FY25, as banks focus on strengthening their liability franchise, sourcing funds through certificates of deposit, despite higher costs. As per the data in the report, the absolute growth in credit offtake was Rs. 8.4 lakh crore for six months, and Rs. 3.8 lakh crore for three months, lagging behind deposit growth of Rs. 11.9 lakh crore and Rs. 7.0 lakh crore for the same periods. The CD ratio has floated around 80 % since September 2023, standing at 79.4 % for the fortnight ending July 12, 2024, as per the report.

Credit offtake expanded by Rs. 20.4 lakh crore, deposits by Rs 23.9 lakh crore over the last 12 months

Kolkata, Outlook for bank <keyword id="6354680" type="General" weightage="20" keywordseo="credit" source="Orion">credit</keyword> offtake remains positive in 2024 while deposit growth is expected to improve, according to the latest research report of <keyword id="19974164" type="General" weightage="20" keywordseo="careedge-ratings" source="keywords">CareEdge Ratings</keyword>. The report said that credit offtake continued to grow, increasing 20.3 per cent year-on-year to reach Rs 159.7 lakh crore for the fortnight ending January 12, 2024. The rise was due to the impact of the merger of <keyword id="19896378" type="General" weightage="20" keywordseo="hdfc" source="keywords">HDFC</keyword> with <keyword id="19895995" type="General" weightage="20" keywordseo="hdfc-bank" source="keywords">HDFC Bank</keyword> along with growth in personal loans. If the impact of the merger is excluded, credit grew at a lower rate of 16.1 per cent year-on-year for the fortnight compared to last year's growth of 16.5 per cent, the report said. Deposits also grew 13.1 per cent year-on-year the fortnight (including the merged impact). The report said that deposit growth is expected to improve in 2024. The outlook for credit offtake continues to remain positive in 2024 supported by factors like economic expansion and continued push for retail credit supported by increasing digitalisation, according to the report. Unsecured personal loans and <keyword id="19938496" type="General" weightage="20" keywordseo="nbfc" source="keywords">NBFC</keyword> advances might witness a certain level of cooling off, the report said, adding that currently, capital levels are quite comfortable for banks and NBFCs. Higher interest rates, inflation and global uncertainties regarding geo-political issues are other key factors which could weigh on credit growth, the report said. The credit-deposit (CD) ratio has been generally hovering below 80 per cent since September 2023, the report said. The CD ratio saw an uptick of 44 basis points and stood at 79.9 per cent in the fortnight ending January 12, 2024, reaching a three-year high. Deposits have seen relatively steady performance since the COVID times, the report said. However, in recent years, credit growth has been significantly outperforming deposit growth, it said.

Outlook for bank credit offtake remains positive in 2024: CareEdge Ratings

Reserve Bank of India has given its nod for the reverse <keyword id="42411" type="General" weightage="20" keywordseo="merger" source="Orion">merger</keyword> of <keyword id="6361420" type="General" weightage="20" keywordseo="idfc" source="Orion">IDFC</keyword> Ltd with its banking subsidiary <keyword id="7145428" type="General" weightage="20" keywordseo="idfc-first" source="Orion">IDFC First</keyword> Bank. The boards of IDFC First Bank and IDFC have approved the reverse merger in July. "....IDFC Limited and IDFC Financial Holding Company (IDFC FHCL) have received letters dated December 26, 2023 from <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword> whereby RBI has conveyed its 'No Objection' to the composite scheme of amalgamation, subject to compliance with the terms specified therein," IDFC Ltd said in a regulatory filing. As part of the composite scheme of amalgamation, IDFC FHCL would first merge with IDFC and then IDFC into IDFC First Bank Ltd. The scheme remains subject to other statutory and regulatory approvals, including from the National Company Law Tribunal and the respective shareholders and creditors of the companies involved under the applicable laws, it said. Under the proposed reverse merger scheme, an IDFC <keyword id="6388677" type="General" weightage="20" keywordseo="shareholder" source="Orion">shareholder</keyword> will get 155 shares for every 100 shares she/he holds in the bank. Both stocks have a face value of Rs 10 each. Post the merger, the standalone book value per share of the bank will increase by 4.9 per cent, as calculated on the audited financials as of March 2023, it said, adding that as of June 2023, IDFC through its non-financial holding company, owned 39.93 per cent in IDFC First Bank. IDFC was an infra lender in the private sector space, and following its bigger peers like ICICI and IDBI, it also launched a banking subsidiary in 2015 -- IDFC Bank -- but could not make a mark as the other two could do. Like HDFC Bank, the merged IDFC First Bank will also have no promoter entity, but fully owned by institutional and public shareholders. IDFC began as an infra lender in 1997. It got in-principle approval from the RBI to set up a bank in April 2014, and in October 2015, it launched IDFC Bank when on-tap licensing began, following which loans and liabilities of IDFC were transferred to the bank. In December 2018, it took over Capital First, a consumer and MSME-focused non-bank since 2012, and was renamed as IDFC First Bank and became a full-service universal bank.

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Credit offtake expanded by Rs. 20.4 lakh crore, deposits by Rs 23.9 lakh crore over the last 12 months

ANI

Outlook for bank credit offtake remains positive in 2024: CareEdge Ratings

PTI

RBI approves IDFC-IDFC First Bank merger

PTI

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