Non-food credit growth drops to 6.44%
The growth rate of non-food credit contracted in March, falling to 6.44% year-on-year (yoy) for the fortnight ended March 12, from 6.58% the previous fortnight. Just a month ago, in the fortnight ending February 12, non-food credit growth stood at 6.61 percent.
As of March 12, the outstanding non-food credit stood at Rs 107.29 lakh crore, according to data released by the Reserve Bank of India (RBI). Commercial paper (CP) issues fell during the fortnight ended February 28 to Rs 69,500 crore, compared to Rs 88,216 crore in the previous fortnight. The outstanding amount of CPs rose from Rs 3.91 lakh crore to Rs 3.99 lakh crore on February 15th.
Deposits with banks continued to grow in double digits and stood at Rs 149.56 lakh crore, up 12.12% year-on-year. The loan-to-deposit ratio was 71.74%.
Although weighted average lending rates on new bank loans fell 122 basis points (bps) from January 2020 to January 2021, overall credit growth continues to moderate due to risk aversion and stalling. continuous excess liquidity with the RBI, Care assessments noted. “In addition, the decline in major industries and slower growth in the housing segment and NBFCs (non-bank financial corporations) have restrained overall growth in bank credit,” the rating agency said, adding that an increase in outstanding loans is expected at the end of the year. transactions are likely to increase bank credit.
In early March, Crisil said as part of the current fiscal year, bank lending is expected to increase by 4 to 5 percent. This is a revision of the rating agency’s projection of June 2020, when it expected bank credit growth of 0 to 1%.
During FY22, Crisil expects bank lending to rebound to 9-10% levels, driven by a recovery in business lending, pushing government infrastructure and a probable recovery in demand. Retail lending, a major driver of bank lending in the past, is expected to slow to 9-10% this year before returning to the average growth of previous years.