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Bank Credit Grows at 17.2% from 7% in Q2FY23; RBI imposes penalty on 7 co-op Banks

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Bank credit grows at 17.2 in September quarterOn November 28, 2022, the Reserve Bank of India (RBI) released the ‘Quarterly Statistics on Deposits and Credit of SCBs: September 2022’, on its Database on Indian Economy (DBIE) portal stating an improvement of bank credit growth to 17.2% in the September quarter of FY23 (Q2FY23) from 7% in the Q2FY22. It was 14.2% in Q1FY23.

Other Highlights:

i.Credit growth remained broad-based as all population groups and bank groups recorded double digit annual growth.

ii.Aggregate deposits growth year-on-year (y-o-y) stood at 9.8% in Q2FY23.

iii.Term deposits growth (y-o-y) rose to 10.2%  in Q2FY23 from 6.4% Q2FY22.

iv.Current and savings deposits growth moderated to 8.8% and 9.4% in Q2FY23 from 17.5% and 14.5% respectively in Q2FY22.

v.The share of savings deposit in total deposits moderated marginally to 34.7% in Q2FY23.

vi.All-India credit-deposit (C-D) ratio increased further to 74.8% in Q2FY23 from 70% in Q2FY22.

  • It was 73.5% in Q1FY23.
  • C-D ratio for metropolitan bank branches, which have a dominant share in the banking business, stood higher at 87.6% in 2FY23. It was 82.8% in Q2FY22.

vii.Private sector bank group has been outpacing public sector banks, foreign banks and regional rural banks in deposit mobilization.

Data Collection:

The data for the above is collected from all SCBs (Scheduled Commercial Banks) under the Basic Statistical Return (BSR)–7 system, and statistics on bank credit and deposits are released as per geography, population group and bank group level disaggregation.

Click Here for Official Statistics

RBI imposes penalty 7 Co-operative Banks

The RBI imposed penalties on the following 7 Co-operative banks in exercise of its powers conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation (BR) Act, 1949:

i.Zoroastrian Co-operative Bank, Mumbai, Maharashtra

Penalty– Rs 1.25 crore

Reason– Non-compliance with RBI directions on ‘Discounting of Bills by Urban Co-operative Banks (UCBs)– Restricted Letters of Credit (LC)’ and the provisions of the Co-operative Banks (Period of Preservation of Records) Rules, 1985 (Rules) framed under section 45Y read with section 56 of BR Act, 1949.

ii.Bharat Co-operative Bank, Mumbai, Maharashtra

Penalty- Rs 50 Lakh

Reason– Non-compliance with the directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters’ (IRAC norms).

iii.Indian Mercantile Co-operative Bank, Lucknow, Uttar Pradesh

Penalty– Rs 20 Lakh

Reason– Non-compliance with the directions issued by RBI on IRAC norms.

iv.Chittoor Co-operative Town Bank Limited, Chittoor, Andhra Pradesh

Penalty– Rs 6 Lakh

Reason– Non-adherence / violation of directions issued under Establishment of Depositor Education and Awareness Fund, Management of Advance – UCBs, IRAC norms-UCBs, and Know Your Customer (KYC)/Anti-Money Laundering (AML)/ Combating of Financing of Terrorism (CFT) Guidelines.

v.Cumbum Co-operative Town Bank Ltd., Cumbum, Prakasam District, Andhra Pradesh

Penalty– Rs 3 Lakh

Reason– Non-adherence / violation of directions issued under Frauds – Classification and Reporting and Board of Directors – UCBs.

vi.National Co-operative Bank Limited, Bengaluru, Karnataka

Penalty– Rs 2 Lakh

Reason– non-adherence / violation of directions issued under Supervisory Action Framework for UCBs.

vii.Tiruchirappalli District Central Cooperative Bank Ltd., Tiruchirappalli, Tamil Nadu

Penalty– Rs 1 Lakh

Reason– Non-adherence/violation of directions issued under IRAC norms.

The above penalties are based on deficiencies in regulatory compliance and will not affect the customers of the aforementioned banks.

Recent Related News:

i.RBI revoked the license of Pune-based Seva Vikas Co-operative Bank due to its insufficient capital and the company’s lack of earning potential. The bank ceases to carry on banking business, with effect from the close of business on 10th October 2022.

ii.RBI has imposed a monetary penalty of Rs 48 lakh on the Kerala State Co-operative

Bank Limited, Thiruvananthapuram for its non-compliance with the provisions of section 56 of BR Act, 1949 and directions issued by RBI on Gold Loan – Bullet Repayment.

About Reserve Bank of India (RBI):

Governor– Shaktikanta Das
Deputy Governors– Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters– Mumbai, Maharashtra
Establishment– 1st April 1935