Growth in non-food bank credit rose to 11.39% year-on-year (y-o-y) during the fortnight ended April 13 from 10.5% in the previous fortnight.
Growth in non-food bank credit rose to 11.39% year-on-year (y-o-y) during the fortnight ended April 13 from 10.5% 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 84.46 lakh crore on April 13, down Rs 86.09 lakh crore on March 30, but up from Rs 75.83 lakh crore a year ago.
Non-food bank credit had recorded a 6.38% y-o-y growth in the year-ago period.
Net corporate bonds outstanding, as at the end of December 2017, 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 stood at Rs 4.33 lakh crore on April 15, down nearly 1% from Rs 4.37 lakh crore on April 15, 2017.
Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to around Rs 115.26 lakh crore, up 12% from Rs 102.97 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for 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.
Much of the growth in fresh loans is being driven by small-ticket retail loans in the absence of fresh investments by corporates. In a recent note, Kotak Institutional Equities (KIE) said that while there was some expectation of a recovery in loan growth led by the implementation of GST, given that the taxes are paid early by the entire supply chain. “However, discussions with banks did not elicit any favourable response on increase in credit limits and higher utilisation of undrawn limits but we probably need to wait for a few more quarter as there would be bottlenecks at the start of this programme and we were also in a seasonally weak quarter,” KIE wrote.
The brokerage expects the medium-term outlook for corporate loan growth to remain weak, given the ongoing deleveraging of large corporate borrowers, lack of large-ticket capex and regulatory thrust towards moving exposure of large borrowers from banking system to bond markets.