The second quarter of this fiscal has not been quite happy and gay for banks. Data compiled by Reserve Bank of India show that demand in credit has been painful while deposits have also traversed in slackened pace.

The total amount of credit disbursed by banks in the second quarter figures to Rs 19,902 crore which is miles below the figures aggregated in the first quarter that is Rs 1.62 lakh crore.

The saddened pace of credit offtake has made bankers preintimate the RBI that the target of 20% growth in credit may be hard to achieve this fiscal. Their hope however stays on the festive season which has always pushed the demand in credit.

Base rate also seems to be holding back banks from making effective moves towards increasing demand of loans. Since banks cannot lend below base rate, eligible corporates are more rapidly switching to other sources of funds like commercial papers (CP) and non convertible debentures (NCD).

The second quarter has also reported dim growth in deposits. Deposits have grown by Rs 74,590 crore in Q2, as compared to Rs 1,46,130 crore in the previous quarter.

Banks are trying their best to attract customers towards deposits by offering lucrative interest rates. The last week or so has seen deposit rates rising by as much as 75 bps across different maturities.