Indian banks saw a spurt in deposits around the end of the fiscal year to March because of year-end promotions and government spending, bankers said.

Data released by the Reserve Bank of India on Saturday showed deposits grew by 3.4 per cent in the two weeks to April 4 to Rs 13,236.62 billion. Deposits as on April 4 were 16.4 per cent higher than a year ago.

Bankers said deposits were boosted by government spending on salaries, pensions and infrastructure projects. Officials estimated the government would spend around 200 billion rupees between late March and April 7.

They also attributed the rise to traditional end-of-year efforts by banks to boost their balance sheets through promotions such as higher rates.

Credit was up 3.4 per cent at Rs 7,498.78 billion on April 4, from Rs 7,253.68 billion two weeks earlier, but bankers said there could have been a slowdown in subsequent weeks.

"Growth was strong in March, but we have seen some sluggishness in the past few weeks, which is usually the case between April and early May," said the credit manager at a state-run bank.

"Companies are making plans for the new year, and many also want to wait for the monetary policy."

The annual monetary policy to be announced on April 29 is widely expected to cut a key interest rate signal, the bank rate, which is now at 6.25 per cent. A cut could persuade banks to lower their deposit and lending rates.

"But the underlying trend has been fairly strong. Retail lending is going very well, and there has also been higher demand for funds from industry," the bank manager said.

Over the year, bank credit was up 24.2 per cent.