MUMBAI: When it comes to getting the best rates from banks, March is the month for deals. Whether it is cash-rich corporates seeking to place bulk deposits or business houses seeking to raise some short-term funds all wait for March. Banks offer their best rates to both depositors and borrowers to show an improved performance.
While a March surge is normal, this year's last minute mop-ups and disbursals have outdone the spike in all previous years. Bank deposits have grown by a record Rs 3,74,950 crore in March 2013 - 34% of growth in FY13 - thereby enabling banks surpass targets which they were lagging until February. At the same time banks have lent out Rs 2,62,980 crore in the last month which is more than one third of the loans made during the entire fiscal.
According to figures released by Reserve Bank of India on Friday, bank deposits and credit have grown 17.4% and 17% respectively. The surge in deposit and credit growth in March has been so sharp as to enable the banking industry surpass Reserve Bank of India's credit and deposit growth target of 16% and 15%. Incidentally, banks have raised Rs 1,84,600 crore of deposits and disbursed Rs 1,33,490 crore of loans in the last week of March alone. This has helped banks reversed the trend of loan growth outsripping increase in deposits.
"Going by past experience those with funds have realised that they get better rates for their deposits in March. This is also the time that a lot of money gets released by government and as a result of lot of funds makes its way into the banking system" said SS Mundhra, chairman, Bank of Baroda.
"This generally happens every year. Corporates wait for March because they get better rates. Banks also press for disbursement in March. We will have to wait for April numbers to see whether the advances were short-term in nature or because of a surge in demand" said BA Prabhakar, chairman, Andhra Bank.
One reason why there is a surge this year compared to earlier years is that the last Friday has coincided with the last working day of the financial year. Industry data for deposits and advances is submitted by banks to RBI every alternate Friday which is known as the 'reporting' Friday. Typically the annual industry numbers are based on reporting Friday numbers and these are at variance with the March 31 st numbers because there is a big jump in lending in the last two days of the year. This year the year end surge has been incorporated in the Friday numbers since this was also the last working day of the year.
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