Non-food credit by scheduled commercial banks rises 12.3 percent

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Updated: August 30, 2019 4:43:33 AM

Banks’ credit to the commercial sector rose by 13.3% as on March 31, compared with 10% a year ago, as several supply-side developments provided a favourable environment for credit growth to firm up and sustain.

Non food credit, scheduled commercial banks, public sector banks, IBC process, Food grains, horticulture productionCredit growth by private sector banks accelerated to 19.9% from 18.7% a year ago, led by their orientation towards personal loans which are low stressed, the report said.

Non-food credit by scheduled commercial banks rose 12.3% in FY19, compared with 8.4% in the previous year, driven mainly by flows to large-scale industry and the services sector. Among bank groups, credit extended by public sector banks (PSBs) accelerated to 9.6% in March 2019 from 5.3% a year ago. Credit growth by private sector banks accelerated to 19.9% from 18.7% a year ago, led by their orientation towards personal loans which are low stressed, the report said.

Banks’ credit to the commercial sector rose by 13.3% as on March 31, compared with 10% a year ago, as several supply-side developments provided a favourable environment for credit growth to firm up and sustain. “Some reduction in balance sheet stress, recapitalisation of PSBs, calibrated reduction in SLR morphed into the liquidity coverage ratio (LCR), growing traction in the IBC process and aggressive efforts towards asset recoveries/write-off/sales as well as provisioning… underscore the critical role of availability of sufficient capital in enhancing credit growth,” the RBI said.

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The credit growth was driven by momentum, despite unfavourable base effects during 2018-19 and was supported by higher mobilisation of deposits during the year, the annual report said. Food grains and horticulture production resulted in a accelerated 7.9% credit growth to agriculture in March 2019, which was 3.8% a year ago. Credit to industry accelerated to 6.9% in March 2019 from 0.7% in March 2018. Within industry, a pick-up in credit was reasonably broad-based, but accentuated towards infrastructure, engineering, cement and cement products, glass and glassware, construction and chemical and chemical products. It is noteworthy that credit to infrastructure accelerated to 18.5% in March 2019, against contraction of 1.7% last year.

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