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Non-food bank credit grows 11.59%

Till a few months ago, credit offtake in the banking system was languishing in the mid-single digits. A sharpening in bond yields has brought back some corporate credit demand to banks, analysts say.

bank credit growth, non food bank credit growth, Reserve Bank of India, RBI
Non-food credit grew 11.59% year-on-year (y-o-y) in the fortnight ended February 16, marginally below 11.89% in the previous fortnight.
bank credit growth, non food bank credit growth, Reserve Bank of India, RBI
Non-food credit grew 11.59% year-on-year (y-o-y) in the fortnight ended February 16, marginally below 11.89% in the previous fortnight.

Non-food credit grew 11.59% year-on-year (y-o-y) in the fortnight ended February 16, marginally below 11.89% in the previous fortnight. According to provisional data released by the Reserve Bank of India , outstanding loans to companies and individuals stood at Rs 82.06 lakh crore on February 16 against Rs 82.11 lakh crore on February 2. Non-food bank credit had recorded a 4.87% y-o-y growth in the year-ago period, when the demonetisation exercise had just ended and bank staff were just beginning to return to normal loan-disbursement functions. The net corporate bonds outstanding, as at the end of December, was Rs 26.47 lakh crore, up 16% from Rs 22.77 lakh crore at the end of December 2016, as per data released by the Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers stood at Rs 4.89 lakh crore as on February 15, up 21.6% from Rs 4.02 lakh crore as on February 15, 2017.  Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to around Rs 113.42 lakh crore, up 12.78% from Rs 100.57 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for January and February are not available yet.

Till a few months ago, credit offtake in the banking system was languishing in the mid-single digits. A sharpening in bond yields has brought back some corporate credit demand to banks, analysts say. In a note dated February 26, Nomura wrote that system loan growth has been picking up after the drop in growth post-demonetisation and the implementation of the Goods and Services Tax (GST) regime. “We are not very sanguine on project finance related growth, but we expect system growth of 10-12% CAGR (compounded annual growth rate) over FY17-20, which should lead to better growth for corporate banks,” the investment bank said. Aggregate deposits with the banking system grew 5.39% y-o-y to Rs 110.52 lakh crore as on February 16, down from Rs 111.09 lakh crore a fortnight ago. This is the fastest growth in deposits in three months. Meanwhile, a separate set of data put out by the central bank showed that bank credit outstanding to industry grew 1.1% y-o-y in January to Rs 26.15 lakh crore. In January 2017, the corresponding figure stood at Rs 25.86 lakh crore, 5.1% lower than the January 2016 level.

Growth in outstanding mortgages in the banking sector improved to 15.2% year-on-year (y-o-y) in January from 14.2% in December 2017. Home-loan outstandings at banks had grown 13.5% y-o-y in the comparable period a year ago. The total outstanding on mortgages in the banking system stood at Rs 9.46 lakh crore as on January 19, 2018. Outstandings on retail loans as a category grew 20% y-o-y in January 2018 against 12.9% in January 2017. Outstanding retail loans as on January 19, 2018 stood at Rs 18.28 lakh crore. In January 2018, outstandings on credit cards was the fastest-growing single-product category among all categories of loans to individuals, rising 31.2% y-o-y. Vehicle loan outstandings grew 10.1%, significantly slower than 18.2% in January 2017, while consumer-durable loan outstandings dropped 7.3% compared to year-ago growth figure of 17.1%. The slower growth in these two categories is due to some part to banks losing market share to non-banking financial companies (NBFCs).
Other personal loans grew 45.7% y-o-y, much faster than 13.3% in the corresponding period a year ago.

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