Banks do the steeplechase in June-end

MUMBAI: The pressure of performance seems to be telling on local commercial banks, which went on an overdrive to raise deposits and lend more during the end of June.

The reason: All of them appear to be desperate to ensure that their balance sheets sport a healthy look for their shareholders at the end of each quarter, when the performance of listed entities are analysed.

Since the traditionally key parameters for business growth encompass deposits and loans, bankers have been on the move during the last few days leading to the quarter to boost the figures. This is accentuated in the last quarter of the fiscal, when the figures on deposits and loans show a major bulge.

The quarter, which ended this June was no different for banks. Collectively, banks have done more business in the last week of the quarter ended this June than the entire quarter. According to the latest figures put out by the RBI, in just seven days between June 23 and June 30, banks raised Rs 38,645 crore as deposits.

This is almost half the amount they raised in the entire quarter, between April 1 and June 23. For banks, the growth in deposits and loans is also crucial in determining where they figure in the pecking order.

Interestingly, even as banks were struggling to maintain their demand deposits portfolio throughout the quarter, they have managed to rake in Rs 17,970 crore in a week.

Banks have been known to rely on their corporate customers to park money with them in the form of short term deposits to shore up their figures. Yet, on an incremental basis, banks demand deposit growth are in the negative territory.

Non-food credit rose by Rs 25,259 crore, as against around Rs 15,000 crore during the whole of the quarter while the gilts portfolio was higher by close to Rs 14,000 crore. Interestingly, banks were relatively consistent with their investment in gilts compared to deposits and loans.

But what could be different this time round is that banks which have shown a higher growth in deposits might risk also ending up with a lower net interest margin as the average cost of deposits have gone up. Most banks raised their interest rate on deposits ranging from a quarter percent to half per cent during the quarter.

Besides, collectively also, banks have shown a higher deposit growth April-June — Rs 95,076 crore in term deposits and Rs 73,095 crore in total deposits including demand deposits. In contrast, they have lent only Rs 38,007 crore in bank credit.