The momentum in credit offtake continues with the growth in non-food credit, or the amount of money that scheduled commercial banks lend to companies and individuals, clocking a rise of 18.73% year-on-year for the fortnight ending May 21, 2010. That?s about 100 basis points higher than the 17.69% year-on-year growth reported in the previous fortnight. Bank of Baroda executive director RK Bakshi said, ?We are growing our assets by about 20-22% on an average with retail loans growing at a slightly higher than 24%.
Bankers feel full-blown credit demand is yet to come and demand will pick up later in the year. Central Bank of India CMD S Sridhar said, ?Although there has been momentum in credit growth, it could gather further pace.? Sridhar confirms that Central Bank has grown its loan book by about 19% so far this year and among the sectors that it has been lending to are automobiles and infrastructure. ?Of late, we have been experiencing a pick-up in credit demand from the textile and retailing firms,? he said.
Punjab National Bank executive director Mohan Tanksale said ?Bank is growing the loan book at above 18%.The RBI has set a rather modest target for the increase in non-food credit of 20% in 2010-11, given that the growth last year was around 16.5%. However, bankers believe credit growth for this year could be somewhat higher and in the range of 20-22%. Retail customers, they point out, have been borrowing mainly to fund purchases of homes or to buy cars.
According to the latest credit figures released by the RBI, total credit rose 18.04% y-o-y for the same fortnight, against 17.24% in the earlier fortnight ending May 7, 2010. The amount lent by scheduled commercial banks for non-food segments in the fortnight ending May 21, 2010, was at Rs 5,631 crore while amount lent in total credit (including non-food and food) segment was at Rs 2,407 crore. Meanwhile, food credit remains subdued at 14.05% to Rs 49,403 crore y-o-y for the fortnight ending May 21, 2010. During the fortnight, food credit has registered de-growth of Rs 3,225 crore.