Jump in non food credit to continue

New Delhi, Feb 25 | Updated: Feb 26 2005, 05:34am hrs
Showing a steady trend, the gross bank credit by scheduled commercial banks (SCBs) increased by 23.8% in the current year compared with 9.3% in the corresponding period of the previous year. Food credit has grown by 15.2% during the current fiscal (upto January 21, 2005) as compared to a 25.9% decline in the last year. Non food credit also increased by 24.2% as compared to an increase of 11.9% in the corresponding period of the previous year.

In absolute terms, incremental non food credit amounted to Rs 1,94,688 crore in the current year while it was Rs 80,573 crore in the corresponding period in the previous year.

According to the survey, this is the highest growth in non food credit witnessed since 1996-1997.

The rising trend in the ratio of non food credit to aggregate deposits of the SCBs during the current financial year indicates a further likely increase in the demand for bank credit in the coming months.

That apart, excess liquidity in the banking sector has witnessed a decline since August 2004, reflecting a higher credit off take. With the growth of manufacturing sector recording an increase of 9% in the April-December period of the current fiscal, the survey adds that the higher growth of non food credit is likely to continue.

Meanwhile, advances by the public sector banks to priority sector increased by 21% in 2003-04 compared to an increase of 18.6% in 2002-03. The share of priority sector advances in total net bank credit of PSBs increased from 42.5% in 2002-03 to 44% in 2003-04.

The share of priority sector lending by private banks improved to 47.4% in 2003-04 from 44.4% in 2002-03.

According to the survey, all bank groups have fulfilled the minimum target of lendings set for priority sector.

Advances by SCBs to sensitive sectors comprising capital market, real estate and commodities amounted to Rs 27,455 crore, till March end, 2004., Advances by SCBs to the capital market recorded the highest growth of 34.2% in 2003-04.

However, the survey underlines that the exposures to SCBs to sensitive sectors remain insignificant. Advances to these sectors accounted for only 3% of the aggregate bank loans and advances.