The total outstanding loans of Reserve Bank of India fell by Rs 21,185 crore to Rs 27,77,567 crore on July 17, against previous fortnight levels.

Though the latest figures indicate an increase in credit off take, bank deposits and investments, the previous fortnight concurred with the quarter-end and helped the banks in reflecting better numbers in their balance sheets.

The non-food credit extended to individuals, corporate, farmers, small business and enterprises shrank by Rs 11,659 crore fortnightly, whereas the food credit loans dipped by Rs 9,526 crore.

Banks have been parking their excess funds with RBI and waiting for revival of rates. On the lateral, credit off take from businesses (seeking cheaper funds) had been until now waiting for the lending rates to decrease.

On an earlier occasion, M Narendra, executive director, Bank of India, reasoned, "Loan demand should gather momentum by the end of September with demand expected from agriculture and infrastructure sector."

Bankers however see no scope for any further reduction in the lending rates.