Kolkata: Canara Bank and Indian Bank have ₹1.10 lakh crore of corporate loan pipeline between them, reflecting steady credit demand from India Inc amid rising bond yields that have made bank borrowing more attractive.
Indian yields, now at their highest in more than three years, have risen in tandem with US yields.
Separately, the pipeline for Indian Bank stood at ₹63,000 crore and for Canara Bank ₹47,000 crore.
India's bond yield hardened 44 basis points in the second quarter, prompting companies to seek bank funding more instead of market-linked resources mobilisation.
Canara Bank said that the corporate advances, along with festive demand from individuals, will help it maintain credit growth around 19% while Indian Bank plans to go a little slow at 14-15% rate.
"We expect the momentum to sustain while we are targeting to improve the deposit growth so that the credit-deposit gap narrows," Canara Bank managing director Brajesh Kumar Singh said.
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Indian Bank managing director Binod Kumar also underscored the need to reduce the gap. "We are looking at 14-15% credit growth. Making profits will be the main driver behind growth," he said.
Indian Bank reported a 16.4% year-on-year credit growth led by strong traction in retail, agriculture and MSME portfolios.
The bank has a pool of ₹30,000 crore of sanctioned corporate loans, ₹10,000 crore of loans with in-principle approval and ₹23,000 crore worth of proposals are under review, Kumar said.
For Canara, the sanctioned pool is worth ₹30,000 crore while ₹17,000 crore of loans are being examined.
Canara's 19.5% year-on-year credit growth was supported by $3.2 billion (about ₹34,000 crore) lent to overseas Indians in an FCNR-B leverage strategy that allowed non-resident to borrow from banks operating in India and park a larger amount in foreign currency non-resident-bank (FCNR-B) accounts.
The bank mobilised $5.8 billion of FCNR-B deposits using the Reserve Bank of India's dedicated window aimed to boost dollar inflows and the country's foreign exchange reserves.