Loan growth may slow down to 14%
In the first three months to June 2012-13, loan sanctions by 32 banks for capex in the private sector was down 60% year-on-year at Rs 26,800 crore for 80 projects compared with R67,700 crore for 131 projects during the same quarter in 2011-12. However, sequentially while the amount sanctioned increased 20% in Q1FY13 compared with Q4FY12, the number of projects sanctioned fell drastically.
An analysis by Kotak Institutional Equities says these loans are large-ticket and there could be volatility across sectors. In September 2012, non-food bank credit increased by 15.9% year-on-year compared with the increase of 18.7% in September 2011. Credit to industry grew by 15.6% in September 2012 compared with 22.9% growth in September 2011. Deceleration in credit growth to industry was observed in all the major sub-sectors, barring chemical and chemical products, cement and cement products and paper and paper products. The growth rate in non-food bank credit was down at 17% during 2011-12 compared with 20.6% in 2010-11.
The report, after analysising ongoing and proposed capex in various sectors, cautious that the country faces a significant challenge in accelerating capex from the current levels and even from traditional sectors like power, road and telecom. In fact, current capex based on ongoing projects in power generation and distribution,
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