Infrastructure loans outpace non-food credit

By: | Published: August 4, 2015 12:18 AM

LOANS to the troubled infrastructure sector grew at a faster pace than the overall non-food credit growth of banks in June, data from the Reserve Bank of India show.

LOANS to the troubled infrastructure sector grew at a faster pace than the overall non-food credit growth of banks in June, data from the Reserve Bank of India show.

Outstanding loan disbursals to infrastructure companies stood at Rs 9.3 lakh crore, an increase of 8.9% from a year ago. Non-food credit growth slowed to 7.7% in June with loan disbursals to most sectors slowing sharply. Within infrastructure, loans disbursed to power companies increased the most — by 13.1% — to an outstanding Rs 5.73 lakh crore. Loan disbursals to iron and steel companies grew 7.1% in June to an outstanding Rs 2.85 lakh crore. This is the second sector that saw the highest growth in disbursals after infrastructure.

According to bankers, growth in loan disbursals has been largely due to demand for refinancing and working capital requirements. “The growth in the corporate book is partly working capital and partly regular funding to highly-rated corporates, including PSUs. In fact, the current demand is only from the highly-rated private sector and public sector entities,” Chanda Kochhar, MD & CEO of ICICI Bank, had said last week. Further, growth in disbursals to infrastructure, and iron & steel companies could continue to be healthy even in the coming months as many companies, such as Adani Power, Electrosteel Steels and Bhushan Steel, have all sought the 5/25 scheme of the Reserve Bank of India.

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Under this scheme, banks can extend loans for up to 25 years with the option of refinancing them every five years either themselves or by roping in new lenders.

Loan disbursals to most sectors, such as petroleum, coal products and nuclear fuels, fertilisers and mining and chemicals, shrank year-on-year, the RBI data showed.

Keeping with the recent trend, retail loans outpaced growth in corporate loans by growing 16.5% in June, led by increase in unsecured lending. Credit card outstandings surged 22.6% to Rs 32,900 crore. Auto loans also grew at a healthy pace of 16.2%. Education loans registered the slowest growth within retail loans, expanding by just 5.6% on year.

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