Sectoral credit growth falls to 8%

Written by feBureau | Mumbai | Updated: May 1 2013, 08:15am hrs
Taking the sheen of banks claims of financial inclusion, the growth in priority sector loans of banks has fallen for the fifth consecutive year in 2012-13, data from the Reserve Bank of India show.

Banks credit to the priority sector including small ticket loans towards housing, agriculture and weaker sections grew only 8.6% in 2012-13 to an outstanding of R15,45,448 crore as on March 22, far less than 12.1% growth in the previous financial year.

Within the sector, housing loans were stagnant and loans to agriculture and allied activity grew slowest at 8.1%. Micro-credit saw a revival after contracting in 2011-12 and grew 3% in 2012-13.

RBI has been putting thrust on its financial inclusion endeavor and has asked banks to reach hinterland by setting up branches or through business correspondents. Banks have also been told to have 25% of their branch network in unbanked areas.

However, despite branch networks expanding rapidly and many banks appointing business correspondents to make credit accessible, growth in small-ticket loans has decelerated.

Not just priority sector lending, but banks overall non-food credit growth has slowed to a decade-low of 14%.

Within banks loan disbursements to the industry, loans to medium-sized companies contracted for the first time in five years.

Loans to companies shrink 5.6% in 2012-13 to an outstanding of R1,24169 crore.

Even loans to large companies grew at a slower pace of 16.7% after clocking over 20% growth for four consecutive years. As on March 22, the large corporate loan book size was R18,34,922 crore.

Amid slowing businesses, banks have been able to shore up loan book through rapid expansion in retail loans. Data also show retail loan growth rose to 14.5% in 2012-13 from 7.80% in 2008-09.

Retail loans amounted to 18% of banks total loan book at R9,04541 crore as on March 22. Within retail loans, credit card outstanding has seen the fastest growth next only to auto loans. Credit card outstanding has grown by 24% to R25,308 crore while auto loans grew by 25%.