Credit growth in April-November period increased 4.5% compared with a growth of 7.3% in the same period last year, said Care Ratings in a report on Friday. The agency attributed this slower pace to sluggish GDP and industrial growth.
It said in incremental terms, credit remained at Rs 2.9 lakh crore compared with Rs 3.86 lakh crore in April-November last year.
“The two sectors to show a higher increase in credit are agriculture and personal loans, while the other two, industry and services have witnessed lower growth,” the report said. The agriculture sector witnessed a growth of 11.2% in March-October 2014 period compared with 5% in the same period last year.
The growth in personal loan segment was at 8.8% compared with 8.1% last year. The rating agency attributed the growth to a surge in vehicle loans that remained high despite unchanged interest rates. Discounts offered in the auto sector aided by excise duty reliefs announced in the Budget would have countered the high level of interest rates, the report said.
The credit offtake in the industry sector witnessed a relatively slower growth at 0.7% compared with 5.7% in the same period last year. This could be attributed to a lower industrial growth of 1.9% and higher interest rates, the report said. It added only five industrial groups — beverages & tobacco, construction, jute textiles, mining and electronics — saw an increase in growth rate with the other three posting positive.
“Growth in infrastructure credit has slowed down from 8.1% to 5.7%, which can be attributed to limited restarting of the stalled projects as well as the prevalence of high interest rates,” the report explained.