Mumbai : Bank credit growth declined to 8.5% in January from 13.5% in the year-ago period led by a sharp slowdown in loans to the services sector, according to the Reserve Bank of India (RBI) data.
Growth in advances to the services sector decelerated to 8.9% from 23.9% in January 2019.
Bank loan growth to non-banking financial companies (NBFCs) slowed to 32.2% in the reporting month from a growth of 48.3% a year-ago.
During the month, personal loans segment grew by 16.9%.
Within personal loans, credit to housing segment grew by 17.5% from 18.4%, while education loan showed a negative growth of 3.1% as against a negative growth of 2.3% in January 2019, RBI data showed.
Advances growth to agriculture and allied activities contracted to 6.5% from 7.6% rise last year.
Credit growth to industry decelerated to 2.5% from 5.2%.
Within industry, loan growth to paper and paper products, rubber plastic and their products and construction accelerated.
“However, credit growth to textile, food processing, chemical and chemical products, basic metal and metal products, all engineering and infrastructure decelerated,” the central bank said.
According to the latest quarterly statistics on deposits and credit of banks, bank loan growth decelerated to 7.4% in the October-December, 2019 from 12.9% the year-ago quarter.
During the quarter, loans by public sector banks grew by 3.7% while credit from private sector banks saw a growth of 13.1%.
In the fortnight ended February 14, 2020, bank credit grew by 6.3% to ₹100.41 lakh crore, from ₹94.403 lakh crore in the year-ago fortnight.
Deposits grew by 9.2% to ₹132.35 lakh crore in the fortnight compared to ₹121.19 lakh crore, RBI data showed.
In February, the Reserve Bank governor Shaktikanta Das had said that slowing credit growth is the biggest challenge the banking industry is facing.
“The most critical challenge today for banks, not just in India but also elsewhere, is slowing credit off-take. It affects the profitability of banks,” Das said a media event.
Rating agency Crisil, in a recent note, said credit growth is likely to be around 6% in this fiscal but is expected to accelerate to 8-9% in FY21.
“Prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit off-take set to rise 8-9% on-year in FY21, a good 200-300 basis points (bps) over the likely growth of near 6% this fiscal,” Crisil said.
This uptick in loan growth would be driven by a gradual pick-up in economic activity, continuing demand for retail loans, and strong growth in lending by private sector banks, it said.
The country’s gross domestic product (GDP) grew at 4.7% in the December quarter, its slowest rate in more than six years.
No comments:
Post a Comment