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In the fortnight that ended on May 21, 2021, the period when the second wave of the Covid-19 pandemic was in full flow, credit disbursed by Indian banks grew by 6%, while deposits rose by 9.7%.

While credit grew faster than the average rate of growth of 5.6% in FY21, deposits were slower than the 11.4% rate of growth in the same year, statistics by the Reserve Bank of India revealed.

Deposits

According to the data, total credit disbursed by banks in the country as on June 4, 2021 stood at 10.8 lakh crore and deposits at 153.1 lakh crore.

While bank credit grew by 5.7%, deposits went up by 9.7% as on June 4 compared to the figures as on June 5, 2020.

Bank advances stood at Rs.102.6 trillion and deposits at Rs.139.6 trillion in the fortnight ended 5 June 2020.

Indicator

The credit disbursed by the banks is an important indicator of the economic activity in the country.

The rise in deposits also measure the propensity to curtail discretionary consumption and save for the rainy day by a large section of the people in view of the uncertainty prevailing in the country due to the repeated waves of infection.

Looking forward

Industry is now looking forward to a rise in consumption by the people that would lead to the revival of the economy.

Research agencies are already reporting expansion of economic activity in consecutive weeks as different states are easing restrictive measures.

While the restrictions in mobility have brought down the cases of fresh infections and fatalities, the pace of vaccinations have risen over the past few days that is expected to fuel economic growth in the second quarter of FY22.

However, many experts have warned of a third wave and several governments have said that they are trying to prepare infrastructure for it.