In the two previous fortnights too, loan growth was dull and hovering around two-year lows.
Loans are going bad even as credit flows remain slow. The December 2019 quarter saw a big chunk of loans going bad across segments — corporate, SMEs and agri — as slippages jumped to1.5% of loans. Recoveries from IBC cases did come as a relief but gross NPAs were nonetheless at a little over 9%. But analysts at Credit Suisee believe these could trend up, given the stress in the telecom and SME sectors. That’s worrying at a time when loan growth continues to slow; data from RBI show non-food credit grew at 7.08% y-o-y in the fortnight to January 31, a near-three year low.
In the two previous fortnights too, loan growth was dull and hovering around two-year lows. Given liquidity constraints, as the credit crunch continues, disbursements by NBFCs stayed muted at 7% y-o-y, though the stronger players did reasonably well. With loan growth slowing, despite the cut to deposit rates, deposit growth continues to outpace loan growth and loan-deposit ratios have moderated further; for PSU banks they are now down to 50-75%.