RBI’s latest credit figures – the last for 2009 – show that credit growth might have bottomed out for the cycle. After a low of 9.6% in November, the figures for December show a rise to 11.3%.
This either means banks are lending again, or it could be a short term blip before moving back down. We’ll see in a few months.
Late last month, around the 24th, we saw the Reverse Repo figures come dramatically down from it’s usual 100K crore mark. Reverse Repo is when banks park money with the RBI at 3.25% annual interest, on a daily basis; this is either to meet ultra short term cash requirements or because they can’t find anyone they can trust to take the money at higher rates. Reverse Repo on the 24th was as low as 19K cr, nearly 1/5th of what it used to be.
Unfortunately, today, we saw the figure go back to 83K crores. That’s not great news, if it remains at these higher levels.
Nearly everyone predicts a greatly profitable quarter for corporates. That will pave the way for future lending from banks. But if going by recent prediction results, companies will under-deliver. Let’s see how it all pans out.
