Credit offtake by companies falters, up just 15.2% in Oct

Crushing hopes of a revival in credit growth in the second half of the current financial year, loans to companies continued grow at a slower pace, latest data from the Reserve Bank of India shows.

Credit offtake to companies grew by 15.2% to R20,263,68 crore in October 2012, slower than 23.1% October 2011. Bankers say they have yet not seen any signs of long-term credit revival and expect credit demand for fresh projects not to improve till the end of the financial year. They say the corporate demand for loans is mainly for short term working capital requirements, a trend seen even in the first half of the year.

The slowdown in corporate loans was seen across the sector. Loans to large corporates grew by 18.9% in October compared with 23.7% last year. Loans to small and medium enterprises slowed down drastically as banks turn cautious towards lending to this segment which has seen a rise in NPA levels. Loans to medium sized companies grew by a meager 1% last month, compared to 30.5% in the same month last year, while loans to small enterprises grew by 6.4% compared to 14.5% in October 2011.

Most banks are relying on the retail loan portfolio to boost overall credit growth amid deceleration in the growth of corporate loans. However the growth in retail loans in October remained lackluster.

In October retail loans increased by 14.1% to Rs 8,33,734 crore, as compared with the increase of 14.3%

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