HYDERABAD: Bank credit growth stood at a five-year high of 12.2 per cent in FY19.
This is the first time incremental credit grew in double-digits after overall credit growth touched a five-decade low of 5.1 per cent in FY17.
Analysts believe the increase in credit offtake implies recovery in the economy, but as RBI Governor Shaktikanta Das remarked in his April policy review, growth in bank credit was not broad-based. While industrial credit growth came out of its torpor, clocking a neat 6.9 per cent growth in FY19, up from a pedestrian 0.7 per cent in FY18, consumer durables, export credit, education loans and micro credit put up a disappointing show, registering a de-growth over last year, shows RBI data released on Tuesday.
“Growth has been driven by the services sector, of which NBFCs was one of the largest beneficiaries. Industrial credit too picked up, but mostly it’s in power and roads. Retail loans saw good growth, but the question is whether this growth will be sustained in the near future given the trend in the demand slowdown,” Dr Soumya Kanti Ghosh, Chief Economist, SBI Research told Express.
Interestingly, NBFCs, which were under stress due to a liquidity shortage following the IL&FS fiasco last year, saw 29 per cent growth. While overall industrial growth picked up, it was led largely by large industries. Micro and medium enterprises saw increases of 0.7 and 2.6 per cent, respectively.
Non-food credit disbursements grew at 12.3 per cent in FY19 (up from 8.4 per cent in FY18), while food credit witnessed de-growth at 0.9 per cent. The sectoral deployment of bank credit was collected from 41 scheduled commercial banks, accounting for about 90 per cent of the total non-food credit deployed by all scheduled commercial banks.
Meanwhile, credit to agriculture and allied activities increased by 7.9 per cent, up from 3.8 per cent, while industrial credit shot up by 6.9 per cent as against a pedestrian 0.7 per cent in March, 2018. Credit to infrastructure, chemical and chemical products and all engineering accelerated, though basic metal and metal products, textiles and food processing decelerated. The services sector, on the other hand, expanded by 17.8 per cent in March 2019 as against 13.8 per cent in March 2018. Personal loans grew by 16.4 per cent as against 17.8 per cent.