The report released by the Reserve Bank of India (RBI) on Macroeconomic and Monetary Developments giving the first quarter review 2009-10 showed that the expansion of incremental non-food credit to industry during this period was led by infrastructure, iron and steel, engineering and construction industries.?The agricultural sector absorbed 16.9% of the incremental non-food bank credit as compared to 10.1% a year ago,? the report said.

However, at the same time, personal loans that accounted for 7.6% of the incremental non-food credit witnessed some moderation, within personal loans, housing loans decelerated to a large extent. Growth in loans to commercial real estate, however, remained high, the report said.

There is also a decline in credit by Rs 18,796 crore to petroleum and fertiliser companies during April-May 2009, as against an increase of Rs 6,530 crore over the same period last year.

However since June 2009, some early signs of turnaround in the credit growth could be observed, the report said. Disaggregated data on sectoral deployment of gross bank credit available up to May 22, 2009 showed that 47.4% of incremental non-food credit, on year-on-year basis was absorbed by industry as compared to 43.2% a year ago.

Apart from banks, the commercial sector mobilised resources from a variety of other sources such as capital markets, commercial papers (CPs), non-banking financial companies (NBFCs), financial institutions, external commercial borrowings, American depository receipts (ADRs), global depository receipts (GDRs) and foreign direct investment.

During 2008-09, flow of resources from domestic non-bank sources increased while flow of resources from external sources declined sharply as compared with the previous year. Among the domestic non-bank sources, resources raised through systemically important NBFCs, gross private placements by non-financial entities, total gross accommodation by four Reserve Bank-regulated AIFIs and gross investment by LIC increased, while resources raised by other sources declined.

Within external sources, resources raised through external commercial borrowing, ADR and GDR issues and short-term credit declined significantly, while investment through FDI routes registered an increase.

Thus, besides the decline in the flow of non-food credit during 2008-09 as compared with 2007-08, the flow of resources from non-bank sources also declined substantially, resulting in lower annual flow of financial resources to the commercial sector.