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SBI Research in its latest report has said that credit growth, which has been lagging deposits for years, has turned buoyant in the third quarter of this fiscal (Q3FY22) by a wide margin at Rs 3.5 lakh crore as against a steep Rs 2.2 lakh crore decline in deposits, indicating that corporates' plans of capacity expansion across sectors.

According to the report, credit growth across banks, which had considerably weakened since FY20, has picked up significantly and was at 7.3 per cent to the week to December 17, 2021 -- a tad lower than pre-pandemic level of 7.5 per cent in December 2019. On the other hand, deposits which was consistently in double-digits since the beginning of the pandemic and was at 12.3 per cent in March 2021 have decelerated to 9.5 per cent in December 2021 -- lower than the pre-pandemic level of 10 per cent. The Q3 of FY22 has seen a visible expansion in credit growth across sectors with incremental CD (credit-deposit) ratio at 133 in Q3 as against only 2 in H1. Incremental deposits declined by Rs 2.2 lakh crore during this time while net credit sales rose by Rs 3.5 lakh crore.

Accordingly, the report said gross bank credit grew from Rs 1,04,349 crore in November 2020 to Rs 1,09,516 crore in March 2021, and further to Rs 1,08,975 crore in August 2021, rising again to Rs 1,11,622 crore in November 2021. Of this the share of industries stood at Rs 27,602 crore, Rs 28,958 crore, Rs 28,196 crore and Rs 28,654 crore, respectively during this period.