NEW DELHI: Bank credit offtake in the April-June 2022 period grew at 14.2 per cent, registering the highest quarterly growth since the December 2016 quarter. RBI data shows credit offtake in urban and metropolitan areas grew at a healthy 18 per cent, and 13.2 per cent, respectively.
Rural and Semi-urban areas also saw double-digit credit growth of 11.6 per cent and 15.3 per cent, respectively. Public sector banks, which account for most of the large corporate and infrastructure sector lending, saw their loan portfolio grow by 11.5 per cent, the first quarterly double-digit growth in over 5 years. Private sector banks reported a healthy 18 per cent growth during the quarter.
Double-digit credit growth in a quarter is a piece of good news for the economy as it hints at a revival in CAPEX as well as retail consumption. It gets even better for the second quarter in a row, the credit offtake showed double-digit growth. In the March quarter, credit offtake had grown by 10.8 per cent.
The last time credit growth had registered double-digit growth in 2 or more consecutive months was 3 years ago in the April-June 2022 quarter. Analysts feel while the corporate sector is still cautious of CAPEX and hence slow in absorbing credit, it is the SME and retail sectors that will drive the credit growth. In a recent report, Kotak Securities said many PSU banks have turned more constructive on growing their balance sheet because the outlook on asset quality has improved.
