Owing to the slowdown in the economy and tepid demand, bankers say that majority of corporate lending has shifted to working capital loans.
?The capex cycle has not been growing as there are no new projects that are being cleared. Most of the loans on the corporate side have been coming in for working capital,? said SL Bansal, CMD, Oriental Bank of Commerce.
Reserve Bank of India?s data for November showed a year-on-year growth of 13.7% in credit to industries at R23,72,300 crore compared to the rise of 19.4% in the same period last year, and experts and bankers said that most of the loans were for extending working capital cycles.
?If you look at the overall GDP growth, and see the breakup for new investments and regular business, you?ll roughly see two thirds of corporate lending will be for working capital and one third will be for capex cycle,? said Dipak Gupta, joint MD, Kotak Mahindra Bank.
RK Bansal, executive director, IDBI Bank, and SK Jain, CMD, Syndicate bank, said 60% of the corporate loans were for working capital, while the remaining 40% were used term loans and capex.
According to a recent India Ratings report, bank loans worth R2 lakh crore belonging to the top 100 corporates belonging to the non-financial and non-public sectors are due for refinancing in the next 12-15 months.