Gujarat’s bank deposits growth rate tanks to 8-yr low

AHMEDABAD: Reporter's email id: piyush.mishra1@timesgroup.com##<http: timesgroup.com=""><br />Ahmedabad: After having constantly registered a double digit growth, bank deposits in Gujarat seem to have lost momentum. Thanks to subdued economy and poor monsoon, bank deposits saw a single digit growth of 9.78% in 2015-16, which is the lowest since 2008-09. Not just deposits, bank advances growth also hit an eight year low .<br /><br />As per the latest report by the State Level Bankers’ Committee (SLBC), the total bank deposits in Gujarat reached Rs. 5.38 lakh crore in 2015-16 from Rs 4.90 lakh crore in 2014-15, which shows a rise of Rs. 47,925 crore or 9.78%.<br /><br />For seven years until 2015-16, the banks had managed to grow their deposits in the range of 14% to 24%. “Slowing down of economy and poor monsoons were the prime factors affecting the growth in deposits and advances,” Vikramaditya Singh Khichi, Convener, SLBC-Gujarat.<br /><br />Investments being diverted to mutual funds and gold contributed to the slower growth in deposits.<br /><br />“A lot of money has moved to mutual funds. Securities And Exchange Board of India (SEBI) relaxed mutual funds norms altering the investment pattern. People moved from fixed deposits to systematic investment plan (SIP) as the latter offered better returns,” said a city-based financial consultant Jayesh Vithalani.<br /><br />“Also, in the last one year a considerable amount of investment has been invested in gold. Last year, gold prices had dipped to Rs 26,000 per 10 gram because of which people moved their money into gold,” he added.<br /><br />On the other hand, the gross advances by the banks grew by 11.31% or 43,838 crore to Rs 4.31 lakh crore as on March 2016 as compared to Rs 3.87 lakh crore in previous fiscal.<br /><br />The non-performing assets (NPAs) continued to give headaches to the banks. NPAs surged to Rs 25,546 crore from Rs. 13,353 crore in 2014-15. Bad loans accounted for 5.92% of the gross advances by the banks in 2015-16.<br /><br />“Reserve Bank of India carried out Asset Quality Review in last two quarters of 2015-16. Several accounts which were under stress were declared NPAs,” added Khichi. With monsoon expected to be good this year, the situation is likely to improve in days to come.<br /></http:>