In order to cope up with bad loans and the effect of demonetisation decision, almost all the Indian banks have taken a hit on the lending issue. The growth of loans in both public and private banks has plunged by Rs 1 lakh crore in the fortnight that ended on November 25 according to various estimates.
According to the Reserve Bank of India the credit or loan growth for the fortnight ended on November 25th according to various estimates. The loan growth declined to 6.6 per cent from 7.9 since the past fortnight.
The various banking details have revealed that around 65,000 crore from November 11 to November 25 has fallen down in the economic sector. At the same time the credit growth also rose by Rs 38,000 and the year before, the growth was around 30,000 crore.
During the last fortnight that ended in September 5, 2014 it has been predicted that the credit growth in the banking system fell to 9.68 percent.
According to bankers of various banks the note process of note withdrawal exercise may turn out to be a drag on the banking sector’s profits with retail fee income and operating cost. The entire attention got diverted from normal banking business to demonetization scenario. All the banking staffs are concentrating on this new cash flow work which is hampering the normal banking working condition.
The banks have been forced to deploy the various staff for cash management which includes both collecting and deposits. The loan off take has completely fallen as the bank manpower was concentrating fully on the cash flow system. According to the bank authorities, this situation will even continue after 30th of December. In regard to this situation all the banks have decided to waive the transaction charges on debit card payments to ease the cash crunch.
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