According to CMIE, demand for bank credit will reach an all-time high in 2022–203
According to data made public by the Centre For Monitoring Indian Economy (CMIE), the financial year 2022–2023 saw an all-time high in bank loan demand. According to the data, commercial banks’ loan offtake climbed by a record-breaking Rs 17.8 lakh crore, or 15%, year over year.
While the demand for credit is increasing at an unprecedented rate, banks did not see a corresponding increase in deposits. Deposits increased by 9% to Rs. 15.8 trillion. In order to raise money and fulfil the demand for loans, this compelled banks to consider other avenues.
CDs and debt issuances in the main market, in accordance with CMIE, have developed as alternative sources of funding for banks. In 2022–2023, banks raised Rs. 1.1 lakh crore from the primary debt market and Rs. 1.2 lakh crore through CDs. Deposits remain the first choice for banks since alternative sources are still pricey, it was said.
According to CMIE statistics, bank deposits did not significantly grow despite an increase in weighted average domestic term deposit rates (WADTDR). In March 2023, WADTDR on new deposits increased to 6.48 percent from 4.12 percent in March 2022. The RBI increased the repo rate at this time by 250 basis points, reaching 6%.
As banks attempt to fulfil the demand for credit in the future, CMIE anticipates that deposit rates will increase. This is because statistics from the first month of the fiscal year 2023–24 indicate that the demand for credit is unlikely to decline anytime soon.
