Large corporate demand lifts credit numbers in India

Banks loans rose three times the pace last year registering 15.1 per cent growth in July 2022 as compared with 5.1 per cent a year, as large corporates came back to banks , according to the latest data released by the Reserve Bank of India.

On a year-on-year (y-o-y) basis, non-food bank credit continued to expand, registering 15.1 per cent growth in July 2022 as compared with 5.1 per cent a year ago, according to RBI’s latest release on sectoral data on bank credit.

“The Banking system is seeing a healthy recovery in loan growth, led by a revival in the Corporate segment, while growth in Retail and SME remains robust. Deposit growth remains modest, but is expected to see some uptick in the current rising interest rate regiime” said a report by Motilal Oswal Financial Services Ltd.

Credit growth to industry accelerated to 10.5 per cent in July 2022 from 0.4 per cent in July 2021. Size-wise, credit to large industry grew by 5.2 per cent against a contraction of 3.8 per cent a year ago. Medium industries recorded credit growth of 36.8 per cent in July 2022 as compared with 59.0 per cent last year, while credit growth to micro and small industries accelerated to 28.3 per cent from 10.5 per cent during the same period. Studies by credit bureaus show that asset quality of borrowers under government’s ECLGS scheme had improved. This could be adding to lenders comfort.

Credit growth in the retail loans sector was higher at 18.8 per cent in July 2022 vis-a-vis 11.9 per cent in July 2021 supported by ‘housing’ and ‘vehicle loans’ segments. Services sector credit growth improved to 16.5 per cent in July 2022 from 3.8 per cent a year ago, mainly due to improved credit offtake to ‘NBFCs’ and ‘transport operators’, RBI said. Credit growth to agriculture and allied activities also improved to 13.2 per cent in July 2022 from 11.1 per cent a year ago.

Source: Economc Times

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