The increase in non-food credit ? loans given by banks to companies and individuals ? slipped below the 16 per cent mark for the first time during 2011-12, despite it being the peak of busy season.
This is the fourth consecutive fortnight that loan growth has stayed below the 18 per cent mark, evidence that the economy continues to slow down. According to the RBI data, non-food credit grew at 15.7 per cent year-on-year in the fortnight ended December 30, 2011, the slowest pace seen so far in 2011-12. Banks lent Rs 97,019 crore during the fortnight, taking the outstanding bank credit to Rs 42,81,097 crore.
Loan growth was relatively poor even in the previous fortnight, when it slipped below the 17 per cent mark for the first time during 2011-12. Non-food credit had grown at just 16.8 per cent year-on-year in the fortnight ended December 16, 2011 while banks lent Rs 30,500 crore. The numbers are in sync with the fact that corporate investments have been slowing down and that the capex cycle is yet to turn. New project announcements, in the December 2011 quarter, fell to their lowest levels since 2005, according to data from Centre for Monitoring Indian Economy.
Fresh announcements in the three months to December were of the order of just Rs 1.88 lakh crore, a drop of 41 per cent y-o-y and 17 per cent sequentially. FE