During the two weeks ended June 5, 2020, the banking system continued to remain in a liquidity surplus of over Rs 3.8 lakh crore, according to a fortnightly banking data report by CARE Ratings.”Liquidity in the banking system is expected to remain in a surplus position with the growth in bank deposits expected to be higher than the growth in the bank credit offtake,” the rating agency said. Bank deposits grew at a healthy 11.3 percent over the past two weeks, but the credit offtake moderated. As of June 5, 2020, bank credit growth was 6.2 percent, similar to the 6.3 percent rate seen on May 22, but a sharp drop from 12.3 percent seen on June 7, 2019, according to a fortnightly bank data report by CARE Ratings. On a year-on-year basis, bank deposits grew slightly to 11.3 percent on June 5, 2020, from 9.9 percent on June 7, 2019. Bank deposits growth was 10.6 percent in the fortnight until May 22, 2020. This decline in bank credit growth could be due to risk-aversion in the banking system and a prolonged lockdown in areas with a high number of COVID-19 infections, the report said. Many lenders cut deposit rates to protect margins, the report said. Banks also cut their lending rates after the Reserve Bank of India (RBI) trimmed the benchmark repo rate by 40 basis points.

(Moneycontrol)