Growth in loans to industry slows to 15.8% in August

Written by fe Bureau | Mumbai | Updated: Sep 29 2012, 08:33am hrs
Bank credit to the industry grew at a slower pace of 15.8% in August, down from 23.6% last year, as credit to most sectors decelerated, data from Reserve Bank of India showed.

Hit by rising bad debt, banks like State Bank of India are going slow on credit offtake to mid-corporate companies, as the medium sized and small businesses have been their biggest pain areas, according to bankers. Loans to medium business grew at just 2.5%, far low than 30.2% last year. Loans to micro and small business grew by 8.5% compared with 13.3% a year ago.

Banks credit to large corporates rose by 19.2%, lower than 24.7% the industry had seen last year. Barring chemical, cement, construction, glass, and paper industry, credit growth declined in all other sectors the Reserve Bank of India observed. Meanwhile, retail loan grew at 14.4%, marginally than last year growth of 15.6%, despite banks cutting their lending rates on housing and auto loans to increase credit offtake in the retail segment.

Credit to consumer durable shrunk by 17.1%, compared with a contraction of 7.3% last year. Both housing and auto loan growth also fell. Housing loan growth was 14.8%, down 50 basis points from last year, while credit growth for autos were down by 40 basis points at 21.1%.