Total business mix that earlier used to be in the range of 2.5-3.0% stood below 2.0% for the second consecutive quarter. In April-June quarter, it stood at 1.59%, compared to 0.69% in Jan-March quarter.
Business activity in Gujarat, measured in terms of total advances given by banks and total deposits received by banks, continue to stagnate for the second quarter in succession, according to a recent banking report. Experts say that a combination of rising inflation and slowing economic growth has been reducing savings and the overall scarcity of liquidity in the market has been forcing people to borrow more.
According to the report of State-Level Bankers’ Committee for the April-June quarter of the current fiscal, total bank deposits in Gujarat declined marginally to Rs6,23,198 crore, compared to Rs 6,23,787 crore in Jan-March quarter of 2017 and Rs 6,31,478 crore in October-December quarter of 2016.
It is the growth in advances that gave a boost to the business of banks. Advances stood at Rs 4,77,480 crore, a rise of 3.79% over previous quarter’s Rs4,60,030 crore which in turn was a growth of 3.41% over the previous quarter.
Total business mix that earlier used to be in the range of 2.5-3.0% stood below 2.0% for the second consecutive quarter. In April-June quarter, it stood at 1.59%, compared to 0.69% in Jan-March quarter.
Hemantkumar Shah, a faculty of Economics at HK Arts and Commerce College here, attributed the fall in deposits to slowing GDP growth and rising inflation, particularly food inflation. “When income falls and expenses rise, savings naturally fall,” Shah said.
Industry representative attribute the rise in advances to the shortage of liquidity in the market and increased vigilance of the government for better tax collection.
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