Foreign banks see 10% negative credit flow

Written by fe Bureau | Mumbai | Updated: Jan 30 2010, 03:16am hrs
Foreign banks, on an incremental basis, have seen a negative credit flow of 9.7% as on January 15, 2010, against a growth of 13.4% in the corresponding period of the last fiscal.

The outstanding incremental credit amount has dipped by Rs 16,720 crore against an addition of Rs 20,374 crore during the year-ago period.

However, the credit growth on an incremental basis for private sector banks, which stood at Rs 47,940 crore, has improved their position to 9.8% over 8.9%(Rs 40,045 crore) recorded during the same time a year ago. The public sector banks incremental credit offtake, at Rs 3,22,500 crore, also rose by 16.8% against 27% (Rs 4,08, 390 crore) recorded in the corresponding period of the last year.

The total credit outstanding amount stood at Rs 1,55,532 crore for foreign banks, Rs 5, 37,025 crore for private banks and Rs 22, 41,219 crore for public sector banks as on January 15, 2010.

Disaggregated data on sectoral deployment of gross bank credit available up to November 20, 2009, shows that credit flow to agriculture remained strong despite deficient monsoon-related weak economic activity, while credit to other sectors significantly decelerated.

In terms of flow of incremental credit, 56.1% of incremental non-food credit on year-on-year basis was absorbed by industry and 23.7% by the agricultural sector, as against 50.7% and 9.3%, respectively, in the corresponding period of the previous year.

The expansion of incremental nonfood credit to the industry during this period was led by infrastructure and iron & steel industries. However, personal loans witnessed deceleration in credit flow; within the category, housing loans also witnessed moderation, the report released by the Reserve Bank of India said.

While exposures for credit card and consumer durables are down 24.7% and 11.8%, respectively, education loans and housing loans are up 31% and 7.3%, respectively, as on November 20, 2009.

Apart from banks, the commercial sector mobilised resources from a variety of other sources, such as the capital market, commercial papers, American and global depository receipts and foreign direct investments. During the first 10 months of 2009-10, flow of resources from external sources increased as compared with the corresponding period of the previous year, mainly reflecting large FDI inflows. Resources mobilised through domestic non-bank sources also recorded an increase during this period. The increased flow from non-bank sources notwithstanding, the reduced flow of bank credit, has led to a decrease in the total flow of financial resources to the commercial sector during April 2009-January 2010.