As per data by the RBI, the growth rate in bank deposits made in the two week period ending 2nd September marked the highest level in the past 10 years. This growth has been aided by the payments from the 7th Pay Commission and credit-to-debit ratio has increased to 14%.
As of fortnight ending on 2nd September, banks recorded a growth of 1.3% to Rs.13 lakh crore in bank deposits. This growth has been recorded after the revised salary, owing to the Pay Commission had been credited to employees’ accounts. Banks hadn’t recorded this much growth in the current fiscal. Before this, growth in bank deposits to over Rs 1 crore was recorded only at the end of a quarter.
According to RBI, the growth is likely to have happened because of the increase in pensions and the first pay-out of the 7th pay commission including the arrears of financial year 2016-17. This additional growth in the bank deposits will also continue throughout the financial year 2017.
The 7th pay commission might encourage growth of retail loans in the upcoming festive season. Many private as well as public sector banks are planning to woo their customers this festive season by offering attractive loan schemes. Bank loan growth has slowed this year with only retail loans providing some growth in the segment. Retail loans have grown 19% Y-o-Y in comparison to total bank credit growth of 7.7%.