Non-food credit growth ? loans given by banks to companies and individuals ? slipped below the 17% mark for the first time during 2011-12, despite it being the busy season.
According to RBI data, non-food credit grew at16.8% year-on-year in the fortnight ended December 16, 2011, the slowest pace seen so far in 2011-12. Banks lent R30,500 crore during the fortnight, taking the outstanding bank credit to R41,84,077 crore.
The sluggishness in credit growth might worry the central bank, which stated, in its Financial Stability Report (FSR) released last week, that “in view of prolonged and slow global recovery, the sustainability of growth of the domestic economy hinges on resuscitation of domestic demand, especially investment, for sustained growth”.
Non-food credit has risen just 8% between March 25 and December 16, much slower than about 12% increase seen in the corresponding period a year ago.
Banks this year have given loans of about R3,09,701 crore against R3,81,046 crore during the same period last year.
However, credit growth in the previous year was higher on account disbursements of about R60,000 crore to telecom companies to bid for 3G licences. Nonetheless, bankers believe there could be a pick-up in the remaining three months of this year.
Said KR Kamath, CMD, Punjab National Bank: “We are not seeing new investments from corporates at the moment. But the industry could still achieve a credit growth of 18% for the year as good growth is expected during January-March period as it’s the busy quarter. If interest rates soften, that will further boost the sentiment.”