Non-food bank credit growth eases to 10.5%

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Mumbai | Published: April 14, 2018 3:21:32 AM

Data from RBI showed that the net outstanding on commercial papers (CPs) stood at Rs 3.72 lakh crore on March 31, 2018, down 6.38% from Rs 3.98 lakh crore on March 31, 2017.

Growth in non-food bank credit declined to 10.5% year-on-year (y-o-y) during the fortnight ended March 30 from 11.39% in the previous fortnight.

Growth in non-food bank credit declined to 10.5% year-on-year (y-o-y) during the fortnight ended March 30 from 11.39% in the previous fortnight. According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 86.09 lakh crore on March 30, up from Rs 83.35 lakh crore on March 16 and compared to Rs 77.87 lakh crore in the corresponding fortnight a year ago. Non-food bank credit had recorded a 9.57% y-o-y growth in the year-ago period. 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 Securities and Exchange Board of India (Sebi). Data from RBI showed that the net outstanding on commercial papers (CPs) stood at Rs 3.72 lakh crore on March 31, 2018, down 6.38% from Rs 3.98 lakh crore on March 31, 2017. Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to around Rs 116.28 lakh crore, up 11.1% from Rs 104.62 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for the first three months of 2018 are not available yet.

However, credit offtake in the banking system alone may not be an adequate indicator of loan disbursements in the economy. The top nine non-banking financial companies (NBFCs) saw disbursements soar 67% y-o-y for the nine-month period between April 2017 and December 2017. The double-digit growth numbers in bank credit may be difficult to sustain, though. Earlier this month, ratings agency Icra said the impact of a higher base may start to pull down growth figures March onwards. “With higher base of March 31, 2017, the credit growth is expected to taper down with estimated credit growth of 9.0-9.5% for the sector by March 31, 2018. Going forward, the impact of risk aversion after recent fraud in one of PSBs (public-sector banks) on overall credit growth is to be seen.” Analysts at Icra added that with expected capital constraints for PSBs, the credit growth for the banking sector during FY19 will largely be driven by private banks. “In such a scenario, the credit growth for banks is expected to remain muted at 7-8% for FY2019,” they noted.

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