According to the RBI, out of 33 industries for which comparable date were available, eight industries witnessed higher credit expansion while anothe six industries recorded sizeable credit expansion in absolute term accounting for 63 per cent of the total expansion of credit in the industrial sector.

The eight industries which witnessed higher credit growth included are coal, metal products, food processing, vegetable oils, paper and paper products and gems and jewellery. Sectors like infrastructure, electricity, iron and steel, cotton textile and chemicals witnessed sizable credit expansion.

According to the report, in 1998-99 total bank credit grew by 13.8 per cent as against 16.4 per cent in the previous year, largelymirroring a deceleration in non food credit to 13 per cent from 15.1 per cent in 1997-98. "A drop of 2.6 percentage points in bank credit during 1998-99 over the previous year largely reflected the subdued credit demand during the year," the report said.

Gross bank credit of select scheduled commercial banks increased by 41,729 croe in 1998-99 as compared with an increase of Rs 41,292 crore during 1997-98. During 1998-99, there was a sharp contraction in increase in advances against fixed deposits, a lower expansion of credit to medium and large industries at Rs 12,986 crore as agaisnt Rs 14,926 crore in 1997-98, and decline in loans to the non banking financial companies (NBFCs) at Rs 145 crore during 1998-99 as against Rs 1,073 crore in the previous year.

However, this deceleration was off-set by increase in other non priority sector personal loans, non-SSI priority sector advances at Rs 10,129 crore as against Rs 7,063 crore in 1997-98 and housing loans at Rs 2,347 crore as against Rs 1,284 crore inthe previous year.

As a percentage of net bank credit, aggregate export credit declined from 10.6 per cent in 1998 to 10.1 per cent in 1999 but increased to 10.3 per cent as on June 1999.

Liquidity in the system improved in 1998-99 as RBI rolled back the CRR hike of August 1998, increased the access of banks through its export credit refinance window and reduced its lending rates to the banks and other institutions.

The decelerated credit growth during the period was due to the slowdown in industrial activity. "The depressed capital market played a role in the deceleration in non-food credit during 1998-99. Due to a steeper decline in corporates' resource mobilisation through equity route, the debt-equity ratio of 807 large public limited companies increased from 56 per cent in 1995-96 to 60 per cent in 1997-98.