Non-food credit growth at an eight-month low of 12.63 per cent

By: |
Published: June 8, 2019 2:50:40 AM

According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 95.57 lakh crore on May 24, down from Rs 95.64 lakh crore on May 10 and up from Rs 85.03 lakh crore a year ago.

Non food credit growth, Reserve Bank of India, public sector bank, Rajnish Kumar, Kotak Institutional Equities, CIBILDeposits with the banking system grew just over 10% y-o-y to Rs 124.98 lakh crore as on May 24, slower than 10.36% in the previous fortnight.

Non-food credit in the banking system fell for the fourth straight fortnight to 12.63% year-on-year (y-o-y) — an eight-month low — during the fortnight ended May 24, down from 13.02% in the previous fortnight. During the comparable fortnight a year ago, non-food credit growth stood at 13.24%.

According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 95.57 lakh crore on May 24, down from Rs 95.64 lakh crore on May 10 and up from Rs 85.03 lakh crore a year ago.

Deposits with the banking system grew just over 10% y-o-y to Rs 124.98 lakh crore as on May 24, slower than 10.36% in the previous fortnight. During the comparable fortnight of 2018, deposits with banks had grown 8.13%. The credit deposit (CD) ratio for the fortnight stood at 76.47%, barely changed from the previous fortnight. Bankers say credit growth took off in the fourth quarter of FY19 on the back of increased credit demand from public sector units (PSUs). “A lot of PSUs had borrowed to make investments in the previous quarter, but in the current quarter, there is not much demand,” said a banker with a large public sector bank (PSB). “We typically see demand take off in December, but last year, that happened in July. Let’s see how it turns out this year,” he added.

On a full-year basis too, banks have made relatively conservative estimates of growth. In his message to State Bank of India’s (SBI) shareholders, contained in the annual report for FY19, chairman Rajnish Kumar predicted credit growth of up to 12% in FY20. “Taking cues from the last year, the bank has set the goal to achieve a healthy credit growth of 10-12% in 2019-20. To an extent, the credit revival and recoveries in FY19 have already set the tone and the bank is confident of achieving the target set for FY20,” he observed.

Much of the growth in FY19 came from the retail segment. Analysts at Kotak Institutional Equities (KIE) wrote in a recent report that this engine of growth too could slow down a bit. “Loan growth has started to moderate in the retail segment, driven by slowdown in select segments. As per our latest discussion with TransUnion CIBIL, consumer inquiries in high-ticket retail segment have declined steeply. While unsecured loan growth is strong, reduction in inquiries and gradual wearing off of low base will lead to decline in pace of growth,” the report noted.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition
FinancialExpress_1x1_Imp_Desktop