The pace of growth in non-food credit perked up to 7.51% year-on-year (y-o-y) during the fortnight ended December 3, according to data released by the Reserve Bank of India (RBI), showing that the credit growth held strong a month after Diwali.
Outstanding non-food credit as on December 3 stood at Rs 111.82 lakh crore, higher than Rs 110.8 lakh crore at the end of the previous fortnight. Deposits grew 9.4% YoY to Rs 159.52 lakh crore.
The credit growth had been languishing through much of 2021, with corporates deleveraging their balance sheets and consumer lending doing much of the heavy lifting for banks. In recent months, however, bankers have been sounding a more optimistic note on the recovery in corporate credit.
Rajiv Anand, deputy managing director (designate), Axis Bank, said on Tuesday there was fairly strong capex in renewables and around the production linked incentive (PLI) schemes. “We’re seeing strong demand around roads, ports, speciality chemicals, data centres — that is a big area where we’re seeing capex. It is fairly widespread at this point in time,” he said.
Anand observed that corporate demand had started to recover after a phase of deleveraging as companies overcame their scepticism around consumption patterns amid the possibility of subsequent waves of the pandemic. “But that confidence is now back and we do believe that private capex demand, as we look at 2022-23, will be much stronger than what we’ve seen over the last three to five years,” he said.
Analysts, too, have taken a favourable view of the credit market, especially with respect to banks. In a report dated December 13, analysts at Credit Suisse said the easing of monetary conditions, the upfronting of infrastructure capex by the government, a pick-up in real estate sales after a multi-year down cycle and a pro-growth turn in India’s industrial policy are driving a pick-up in the gross domestic product (GDP).
“Even as corporate loan growth is yet to recover, retail and SME (small and medium enterprises) disbursements are running ahead of pre-COVID-19 levels. Hence,the overall loan growth should recover to double digits by 2H22E and the outlook remains positive for FY23E,” the report said.