From SBI to Yes Bank, lenders cut deposit rates to slash cost of funds

Non-food credit in the banking system grew 10.6% year-onyear during the fortnight ended September 30, up from 9.3% in the previous fortnight, as loan demand improved with the advent of the festive season.

Non-food credit at the end of the fortnight under review stood at R74.35 lakh crore, according to data released by the Reserve Bank of India. Growth in deposits with banks also grew 11.3% y-o-y, against 9.9% in the previous fortnight, to R101.43 lakh crore – the first time total banking deposits crossed the R100 lakh crore mark.

With minimum growth in project loan sanctions,10.6% credit growth is most likely a result of demand from the retail segment, something which the management of several large banks have lately spoken about as their focus area.

Companies have been moving their borrowings to the corporate bond market due to lower interest rates.While the lowest one-year MCLR is currently 9.05%, the FIMMDA benchmark for ‘AAA’-rated corporate bonds is at 7.6%.

In the quarter ended September, fresh corporate debt issuance hit a record high of R2.1 lakh crore. Total outstanding corporate debt, as a result, stood at a record R21.94 lakh crore at the end of Q2FY17, data released by the Securities & Exchanges Board of India showed.

State Bank of India

Yes Bank