Nearly 80% of FY19 credit growth comes in Sep-Nov


Mumbai, Jan 2: Almost 80% of credit growth in the first eight months of the current fiscal has taken place between September and November. Much of the bank credit has gone towards personal loans and industry, with only the non-banking finance companies (NBFCs) showing a decline in bank loans. Besides NBFCs, the medium and small enterprises (MSEs) segment also saw bank credit shrinking.
Within industry, food processing, fertiliser, iron & steel, cement, petroleum and infrastructure (roads & power) led the growth. Of the total incremental credit expansion of Rs 4.35 lakh crore in the current fiscal, Rs 3.46 lakh crore is accounted for in the three months ended November.
“This is encouraging and clearly evident across retail loans, including housing and personal loans. In fact, the pace of growth has significantly picked up in November with oil prices declining and possibly acting as a boost to discretionary spending that was declining pre-October. The pickup in retail credit growth is all the more encouraging as November witnessed 10 holidays across the country and this may have pushed out some retail loan demand into December with a delay in processing of fresh loan applications,” said SBI group chief economic adviser Soumya Kanti Ghosh.
According to an SBI report, incremental retail credit expansion in the three months ended November stood at Rs 73,800 crore — higher than the same period in FY16 when it had last peaked, and highest in the last decade since FY08 from when sectoral data is available.
In November, incremental credit to NBFCs fell to Rs 3,700 crore from Rs 16,000 crore in October, and Rs 56,500 crore in September, while it showed negative growth for MSEs. “It is, however, possible that credit to MSEs picked up in December following the launch of a new online scheme in November. Even after all this, credit to NBFCs and retail account for 45% of incremental credit expansion for the three months ended November,” said the SBI report.
Additionally, aggregate bank credit data available up to December 7 shows that advances grew 15.1% year-on-year, while deposits grew 9.7%. This is the highest growth in bank credit in five years, as a 15% growth rate was last seen in November 2013. The numbers also show that there is a wedge between bank credit and deposit growth.