Private banks’ net advances grow in March quarter

The largest private lender HDFC Bank has shown a 13.9% year-on-year (y-o-y) growth in the loan book.

Private lenders have reported an improvement in the net advances during the March quarter (Q4FY21), according to provisional data released by the banks. While the largest private lender HDFC Bank has shown a 13.9% year-on-year (y-o-y) growth in the loan book, Federal Bank reported over 9% y-o-y growth in the advances. Similarly, IndusInd Bank has shown a 3% y-o-y increase in the net advances during the March quarter.

Although, Yes Bank has registered a meagre 0.8% y-o-y loan growth, its retail disbursements more than doubled to Rs 7,828 crore during Q4FY21. The provisional data also suggests a robust deposit growth for private lenders.

While Yes Bank’s deposits grew 54.7% y-o-y, IndusInd Bank registered a 27% deposit growth during the March quarter.

Similarly, HDFC Bank has shown a 16.3% y-o-y growth and Federal Bank showed a 13% growth in its deposit base.

The growth was supported by a strong current account savings account (CASA) deposits rise of 51.8% in Yes Bank, 27% growth in HDFC Bank and 26% in Federal Bank. In early March, rating agency Crisil said that in FY21, bank credit was seen rising 4-5%. This was a revision of the rating agency’s projection from June 2020, when they had expected the bank credit growth to be 0-1%.

In FY22, Crisil expects the bank credit to bounce back to 9-10% levels, driven by a pick-up in corporate credit, the government’s infrastructure push and a likely revival in demand. According to RBI’s latest bulletin, private banks clocked a credit growth of 8.6% y-o-y till February, 2021. The bulletin also mentioned that credit growth of scheduled commercial banks (SCBs) appears to have bottomed out as it grew at 6.6% y-o-y in February, 2021. Later, the non-food credit grew at 6.44% y-o-y for the fortnight ended March 12, 2021.