>Banking Update (ANAGRAM)

BANKING UPDATE

Where money is going?

On a review of ongoing global and domestic macroeconomic situation, RBI infused Rs 4000 billion into the system through series of monetary measures since mid September aiming at availability of fund with baks that can be passed to productive sectors to revive the economic growth. But the baks are seen on a diverse track where they prefer safety over growth resulting in to reluctance for lending. Advance growth figures of Q3FY09 gave a clear indication of it. The next obvious question would be, where the money infused by RBI is going? Bank that lost trust and confidence in the market, chose RBI itself by way of G-Sec investment and reverse repo window as the heaven place for putting their surplus funds even though it returned lesser than normal credit of banks.

Advance growth of baks inder analysis dropped to 4% on sequential basis in the third quarter of this fiscal as compared to 8% of the second quarter. Private sector banks were seen more cautious for lendingin this period on a fear of high risk of default on their portfolio. Credit growth of scheduled commercial banks (SCB) had touched the level of 29.13% in the first week of October, slipped to 19.78% in Feb 09. Incremental C/D ration fall below 70% in Feb from the high of 97% of October.

To see full report: Banking Update March'09