The Reserve Bank of India has said all major sectors of the economy, barring agriculture, recorded accelerated credit growth in November 2010, both on a y-o-y and financial year basis.
Up to November 2010, the non-food gross bank credit grew by 9.1 % as against 4.4 % during the corresponding period of previous year.
Credit to industry grew by 27 %(y-o-y) in November 2010 (14.2 %in the previous year), led by infrastructure, metals, engineering, textiles, food processing and chemical and chemical products. On a financial year basis (up to November 2010), credit to industry grew by 11.7 % as compared with 9.4 % a year ago.
The ?industry? break-up highlighted? skewed credit distribution during the year(till November) as 47% of the incremental credit to industry in the said period went to infrastructure, led by power sector (25%) and telecommunication (15%), said Deepali Bhargava, chief economist, ING Vysya Bank.
Credit to the services sector grew by 23.2 % in November 2010 as against 7.9% in the same month of the previous year. On a financial year basis, it grew by 10.4 % against an increase of 0.8 % during the corresponding period of the previous year.
With the capex pipelines suggesting significant capex growth in power, steel, telecom and petroleum products in the next few years, infrastructure is expected to continue to out-run other sectors in terms of credit growth. This may also imply that bulk of other ?industry? may have to rely on internal accruals as banking system liquidity stays on the tighter side, said Bhargava.
Within the services sector, credit offtake by the real estate sector grew by 19.1 % on a y-o-y basis, in November 2010 as compared to 15.3 % in the previous year. On a financial year basis, it grew by 14.5% as against a decline of 4.2 % a year ago.
On a y-o-y basis, personal loans grew by 11.9% in November 2010 as compared with 0.7% in the previous year, with most of its components such as housing, vehicle loans and other personal loans exhibiting accelerated growth.
On a financial year basis, growth in personal loans accelerated to 8.5% against an increase of 0.9% a year ago.
Loans to both commercial real estate and housing have been under RBI?s radar and higher provisioning and risk weights announced for housing loans in November 2010 are likely to impact such loans negatively as they highlight RBI?s concerns on asset price inflation. Excessive leveraging on housing is expected to come down explained Bhargava.
Credit to agriculture on y-o-y basis grew by 20% in November 2010 as compared with 21.4 % in the same month of the previous year.? During the financial year (up to November 2010), credit to agriculture declined by 1.0 % as compared with an increase of 1.3 % a year ago.
