Banks record a third of its business of lending, raising deposits in March

MUMBAI: Banks have done almost a third of its business of lending and raising depositsin the month of March and managed to surpass the Reserve Bank of India's projections for the year.

Loans and deposits have 17% and 17.4% respectively in FY'13 surpassing the central bank's projection of 16% and 15% respectively for the year. For most part of the year, banks were grappling with a slowdown in both credit as well as deposit. Banks were cautious on fears of rising bad loans. Besides, corporate demand was also low because of lack of investment in new projects.

Notably, almost 35% of the business took place in the month of March. Deposits mobilised in the month amounted to Rs 3.75 lakh crore of the Rs 10.27 lakh crore mobilised during the year. While they lent Rs 2.69 lakh crore in March of the total of Rs 7.83 lakh crore lent during the entire fiscal year.

Banks often tend to shore up their business in the last months of any financial year to boost balance sheet size. Typically, banks lend short-term loans to their corporate clients, who then in turn park these funds with other banks as deposits. This circular activity tends to prop up both deposit and credit figures for them. These transactions are usually reversed by end of April.

Besides, a lot of repayments tend to take place towards the end of the year, which add to the resources of banks.
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