NEW DELHI: A large decline in savings bank deposits and lower pace of accretion of time deposits during Unlock-4 reveals household stress, SBI said in its Ecowrap report on Thursday. It added that consumer deleverage also declined in August, indicating that the stress on household balance sheets was now emerging with gusto.
"Our bottom up approach suggests that deposit and credit growth (extrapolated on the basis of sum of daily variations) during the unlock 4 regime witnessed large declines, with the maximum decline in savings bank deposits and even bank advances during successive lockdowns," SBI said.
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Deposits (savings, current and term) which rose to Rs 1.21 lakh crore in Unlock-2 has declined significantly to Rs 44,339 crore during Unlock-4. Similarly, total advances which increased to Rs 97,818 crore fell sharply to Rs 1.76 lakh crore during the same period.
Reversing the increasing trend witnessed in June and July, incremental bank credit growth has lost much of the momentum in August. The bank credit that increased by Rs 39,200 crore in June and July, fell by Rs 36,000 crore in the month of August.
The report further added that estimates of short-term consumer leverage (presented as sum of credit card, personal loans, advances against FD, shares, bonds outstanding, etc.) which had reached a peak in FY18 at Rs 1.56 lakh crore declined significantly to Rs 1.29 lakh crore in FY19.
However during FY20, this has increased marginally to Rs 1.35 lakh crore, reflecting possible consumer stress. Consumer deleveraging, which had declined by whopping Rs 53,023 crore in June, has improved to Rs 14,111 crore in August.
However, it remains to be seen how much of this consumer deleveraging is because of the lockdown or lack of business, and how much is because of consumers actually maintaining discipline in consumer behavior.
While the government sticking to its borrowing programme will please the debt markets, the target looks challenging given the current exceptionally weak Government finances, SBI cautioned, adding that it expects the country’s consolidated fiscal deficit to touch 13 per cent of GDP.