Growth in bank lending to services slides in November

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Mumbai | Published: January 1, 2020 8:02:22 AM

The growth in bank credit to the services sector slid to 4.8% year-on-year in November against 28.1% a year ago, compared with 57.2% a year ago.

The data show that the reluctance of banks in lending to NBFCs in the aftermath of the IL&FS crisis continued in November as well.

The growth in bank credit to the services sector slid to 4.8% year-on-year in November against 28.1% a year ago, led by the decelerated growth in bank lending to non-banking financial companies (NBFCs) at 29.1%, compared with 57.2% a year ago.

Data on sectoral deployment of bank credit released by the Reserve Bank of India (RBI) on Tuesday showed that the outstanding loans to the services sector stood at Rs. 23.6 lakh crore as on November 22, up from Rs. 2.25 lakh crore in the year-ago period.

The decelerated growth in bank lending to the services sector became evident in September, when the bank credit growth slowed to 7.3% y-o-y from 24% a year ago. The non-food credit growth came in at 7.2% as on November 22, compared to 13.8% a year ago.

Bank credit to other segments in the services sector also witnessed a decline in growth. Loan growth to professional services grew at a meagre 1.3% against 24.5% a year ago, while bank credit to computer software services declined by 0.4%, against a growth of 13% a year ago. Credit to other services fell by 19.5%, against a growth of 39.5% in the year-ago period.

The data show that the reluctance of banks in lending to NBFCs in the aftermath of the IL&FS crisis continued in November as well.

The growth in bank lending to industries slowed to 2.4%, against 4% a year ago. Priority sector lending grew at 3.5%, down from 8.4% a year ago.

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